Potential clients often tell me, “But the bank said they were working on my loan modification and that I wasn’t in foreclosure but they foreclosed my house anyway!” My predictable and frustrating response is almost always, “Texas law does not protect verbal representations, although they may be immoral or unethical, they’re not illegal”. It’s not a response I take lightly or care to give but that’s the state of the law in Texas. I’m not one to lie to my clients either.
Its debatable whether the banks and their upper management are purposely trying to mislead people in their pursuit of a loan modification. What is not debatable is that banks are not obligated to give a homeowner a loan modification. Texas courts are routinely throwing these cases out of court with no justice for the homeowner. We don’t have to like it, we don’t have to agree with it, but to continue to make the same arguments is a swift legal death for the homeowner. As Einstein once said, “the definition of insanity is doing the same thing over and over and expecting different results”. Texas adheres STRICTLY (maybe more than any other state) to what is known as the Statute of Frauds for loan modification applications-this means that if you don’t have a FINAL APPROVAL in writing, IT DIDN’T HAPPEN. PERIOD. END OF STORY. This is a very strict standard the Courts are adhering to so it’s important to understand it and not underestimate it. If you want help, get the FINAL APPROVAL in writing!
Here’s a case example we’ve previously assisted with:
Homeowner files for multiple loan modification applications. He is routinely denied. After several denials, he is sent an approval letter. The letter is dated May 29th, 2012. The letter states that homeowner is approved but must send in the documents within 7 days from the date of the letter. May 30th is a Friday and the homeowner believes he didn’t get the letter until sometime in June. Of course the letter is not sent certified mail so the exact dates are unknown at this time. Homeowner sends the signed documents, the $2800 down payment, and proceeds to makes his new monthly payment for 6 months. After 6 months and with no prior warning, Bank of America sends him a letter stating that he did not accept the modification timely so there is no modification. He has been struggling to fix this since then. After filing a lawsuit, the Federal District Court in Houston threw his case out stating that he did not comply with the terms of the offer. Yes that’s right, even though they sent an approval that probably could never have been accepted within THEIR 7 day timeline, the homeowner is left fighting for several years over something so trivial! Thousands of dollars later, we have filed with the 5th Circuit Court of Appeals. Only time will tell whether our appeal will be successful but this is a great case that illustrates the harshness of loan modifications. If you fall behind and truly want to resolve your issue without spending tens of thousands of dollars and several years in court battles, then it’s important that you get immediate, competent, professional advice. Otherwise it’s pretty clear your home may be in jeopardy!
(Written by Rick Guerra – Managing Partner)