Jan 27

HAMP trial modifications, if fully peformed by borrower, become permanent

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In a recent California Third District Court of Appeal case, that court ruled that if a borrower in distress seeks a modification of their loan, and the lender offers a “trial modification plan,” if the borrower successfully performs on the trial, the bank is bound to make that trial modification permanent. I have seen in my practice many clients who have reported fully performing on trials such as discussed in that case, and then a previously noticed default is taken to foreclosure. This case takes a small chip out of the stone wall that banks have built since the 2007-2010 real estate bubble burst, to give earnest and good faith performance of borrowers in distress a chance. See Mary Work’s article in the most recent California Real Estate Law Section newsletter:

http://realpropertylaw.calbar.ca.gov/#rec2

See the decision in full: http://www.courts.ca.gov/opinions/documents/C070643.PDF