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BofA Forced to Complete Permanent Modification

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Mortgage Daily

                                                 June 22, 2012

A state appeals court has ruled that Bank of America Corp.’s mortgage servicing subsidiary must complete a loan modification even though the company claims that “there was never a meeting of the minds” on the modification.

Countrywide Home Loans Inc. funded a nearly $600,000 mortgage for Sylvia T. Ficco in April 2007. Countrywide was acquired by BofA in July 2008.

Following a default, BAC Home Loan Servicing LP filed a foreclosure complaint in June 2008.

But Ficco applied for a loan modification under the Home Affordable Modification Program, and her application was accepted in October 2009.

BofA sent a letter in October 2009 advising the borrower to “start your three-month trial period for your mortgage loan modification,” while another letter was sent in March 2010 indicating that she qualified for a permanent modification and would soon receive a modification agreement for execution.

But in November of that same year, BofA reversed its decision and sent letter stating that she was not eligible for the HAMP modification. The reason given for the change in position was that a calculation of the net present value revealed that a loan modification wouldn’t be “in the financial interest of the investor that owns your loan.”

So Ficco filed a motion to enforce the modification in November 2010 with the Superior Court of New Jersey, Chancery Division, and the motion was granted on Feb. 25, 2011.

BofA then filed a motion for reconsideration on May 9, 2011, consisting of a brief with some unauthenticated documents attached. But the motion was denied.

In an appeal filed by BofA with the Appellate Division Superior Court of New Jersey, BofA reasoned that the loan modification was not enforceable because “there was never a meeting of the minds” since the March 2010 letter was sent in error. It also argued that the trial period was conditional, and it wasn’t an enforceable offer until further documents were presented and signed.

In addition, according to BofA, the defendant was never offered a permanent loan modification.

But the appellate court wasn’t moved by the argument — especially given that BofA’s counsel “candidly admitted” that the record contains no legally competent evidence to support its central claim that the letter was sent in error — and affirmed the trial court’s decision.

“We agree with Judge Stephan C. Hansbury that defendant mortgagor presented legally competent evidence that by letter dated March 30, 2010, plaintiff mortgagee approved her application for a loan modification, and that she accepted plaintiff’s offer by continuing to make payments under the loan modification offered to her,” the appeals court wrote in its decision. “We also agree with the trial judge that plaintiff failed to present legally competent evidence to support its claim that the March 30, 2010 letter granting the loan modification was sent in error.”

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