• DYE CULIK PC | Consumer Protection Division

First Circuit Rules Homeowner’s Appeal is Moot After Accepting Loan Modification


The homeowner alleged that her HSBC Bank did not have an assignment of her mortgage, and thus was not legally entitled to foreclose. The trial court dismissed her case, and she appealed to the Court of Appeals.

In the meantime, however, she entered into a loan modification. Under the modification, the homeowner agreed that a new bank was the owner of her loan, and she was offered a new principal balance and interest rate.

As a result of the modification, the court held that her claim to dispute who owns her loan was now rendered “moot.” Mootness is a doctrine that prevents court from adjudicating cases where there is no controversy left to decide. Here, because the homeowner now agreed that there was an owner of her mortgage, the court did not need to decide the case, and dismissed the appeal.

The lesson from this decision is that mortgage cases can often be tricky. On the one hand, a homeowner may have been mistreated by a bank who has a disputed claim to ownership of the loan. On the other hand, courts may be dismissive of homeowners who have already achieved the goal of their case, avoiding foreclosure via a loan modification. This is a complicated area of law in which the rules are constantly evolving.

The case is available here: HSBC v. Matt

#HSBC #loanmodification #mortgage