A trial judge has ordered the lender to execute a permanent modification based upon the borrowers total compliance with the provisions of the trial modification.
Wells Fargo (Wachovia) was given the terms of the modification, told to put it in writing and file it. If they don't sanctions will apply.
The whole purpose of the banks entering into trial modification was actually to create the impression that the banks were modifying loans. Comply with the payment schedule, insurance, taxes, and everything else, and it automatically becomes your permanent modification.
Not so, according to Bank of America, Wells Fargo, Chase, Citibank. According to them they could keep the money paid by the borrower to be approved for the trial modification, keep the money paid by the borrower to comply with the terms of the trial modification, and then the banks could foreclose making up any excuse they wanted to deny the permanent modification.
The sole straw upon which their theory rests is that they were only obligated to "consider" the modification; according to them they were NEVER required to make it such that the modification would become permanent unless the bank expressly said so, which in most cases it does not.
The Banks say that the trial modification is nothing despite the presence of an offer, acceptance and consideration.
However, If the borrower applies for and is approved for trial modification and they comply with the trial modification provisions, a contract is formed. The foreclosure defense attorney argued SIMPLE contract law. And the Judge agreed.
Once that last payment is made, and in most cases, the payment is continued long after the trial modification period is officially over, the Bank has no equitable or legal right to deny the permanent modification.
Every time a loan does NOT go into foreclosure, the Banks' representation of defaults and the value of the loan (in order to trigger insurance and other third party payments) come under question and the prospect of disaster for the Bank rises, to wit: refunding trillions of dollars in insurance and CDS money as well as money received from co-obligors on the bond.
Every time a loan is found NOT to have actually been purchased by the asset pool (REMIC, Trust etc.) because there was no money in the asset pool and that the investors merely have an equitable right to claim the note and mortgage under constructive trust or resulting trust theories, the validity of the mortgage encumbrance fails. There is no such thing as an equitable mortgage lien or an equitable lien of any sort.