Wells Fargo Mortgage Modification Lawsuits Revived by Court
In a separate action involving Wells Fargo, a U.S. Court of Appeals held that the bank must face lawsuits by home loan borrowers for refusing to offer them permanent mortgage modifications.
The federal government’s 2009 Home Affordable Modification Program requires the bank to offer permanent adjustments to homeowners who met the terms of a trial-period modification, a three-judge panel of the U.S. Court of Appeals in San Francisco ruled.
“The program seems to have created more litigation than it has happy homeowners,” the judges said in yesterday’s decision.
Reversing a lower-court dismissal of two separate lawsuits, the panel rejected the conclusion Wells Fargo was only bound if it had actually offered the borrowers a fully executed copy of a modification agreement.
NOONAN, Circuit Judge, concurring:
Read as a whole the TPP between Corvello and Wells
Fargo makes no sense. It is self-contradictory. Page one
promised Corvello in two places that if his representations
were accurate and if he were in compliance with the Trial
Period Plan, the Lender “would provide” him “with a Loan
Modification Agreement.” Paragraph 2G stated: “the Loan
Documents will not be modified unless and until (i) I meet all
of the conditions required for modification; (ii) I receive a
fully executed copy of a Modification Agreement and (iii) the
Modification Effective Date has passed.”
Wells Fargo drafted this document, and Wells Fargo must
be held responsible for it. The document promises a
substantial benefit to Corvello if he meets its terms. The
document then makes these benefits illusory because they
depend entirely on the will of Wells Fargo. To say, “I give
$100 for your watch but I will decide whether I pay you
$100” is not to make a contract but to engage in a flim-flam
or, in plain words, to work a fraud. You promise so that the
other will perform. You reserve your promise so that the
promise is empty while you have gotten what you wanted
from the promisee.
No purpose was served by the document Wells Fargo
prepared except the fraudulent purpose of inducing Corvello
to make the payments while the bank retained the option of
modifying the loan or stiffing him. “Heads I win, tails you
lose” is a fraudulent coin toss. Wells Fargo did no better.
The cases are Corvello v. Wells Fargo Bank NA, 11-16234 and Lucia v. Wells Fargo Bank NA, 11-16242, U.S. Court of Appeals for the Ninth Circuit (San Francisco).