• DYE CULIK PC | Consumer Protection Division

How Bad Does It Have to Be Before You can Sue Your Bank Over a Loan Modification?

Consumers frequently and justifiably complain about the way the big banks handle their loan modification applications. The story our office often hears is that a homeowner was told to submit the same documents over and over — often for months or even years — while their bank or mortgage servicer ignored them, lost the documents, or even scheduled foreclosures while the account was under review for a loan modification.

This causes stress, anxiety, and even marital strife. Homeowners know that they are being treated unfairly, but they do not know whether the law provides them with recourse.

Although the threshold for what constitutes illegal behavior by a bank is high, over the past few years courts in Massachusetts have come to a general consensus about what is required to sue your mortgage company.


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Court decisions are especially instructive in describing the type of behavior a mortgage servicer must engage in to have violated Massachusetts law. The homeowner must claim more than “technical” violations of loan modification guidelines. This means that some delays, oversights, and errors may be legally permissible, even if they cause the homeowner some inconvenience.

But where the loan modification process is marred by unfairness — rather than minor delay or trivial clerical flaws — the bank may have violated Chapter 93A. Some examples of prohibited behavior include:

  1. A history of being unresponsive to the homeowner’s attempts to obtain a loan modification.

  2. A loan modification that increases, rather than decreases, the mortgage payments.

  3. Misleading the homeowner about criteria for a loan modification.

  4. Misleading the homeowner about the status of a modification application.

  5. Other misrepresentations, delay, and evasiveness in evaluating a loan modification application.

  6. Repeatedly requiring a homeowner to resubmit documents that had previously been provided.

  7. Foreclosing while a loan is under review for a modification.

Not all of the above-described behavior, in isolation, is necessarily enough to show a violation. But where a mortgage servicers commits similar acts over an extended period of time, a judge is more likely to allow a homeowner’s lawsuit to proceed.

Our office has represented numerous homeowners in Massachusetts court and federal court and can provide a no-cost case evaluation.

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Culik Law is a Massachusetts Law Firm. The posts on Culik Law’s blog are not intended as legal advice. If you have questions about your particular situation, CONTACT CULIK LAW for a Free Consultation.

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