Court Allows Bank to Mislead Hurricane Irma Victim in Foreclosure
During the financial crisis, there was no shortage of horror stories about banks conducting all kinds of illegal foreclosures against homeowners. Some stories were truly appalling, such as foreclosing on the wrong people or the wrong addresses, or foreclosing on people who hadn’t even missed a payment.
A recent story about an ongoing case demonstrates that banks continue to mislead homeowners and to foreclose on them at will.
Promises of Forebearance
The case involves a woman whose home was in the path of Hurricane Irma. She had applied for and been granted a forbearance plan, specifically offered by the bank to victims of the hurricane. Under the program, she would be given three months when she did not have to make mortgage payments. The program’s terms were in writing, which she and the bank agreed to.
Importantly, she even called the bank, asking when the missed payments would be due, and was told that they would be added onto the end of her loan.
While in forbearance, the bank sent default letters to the homeowner and told her that by January, when the three month forbearance expired, that she had to immediately pay the three payments back in one lump sum. If she did not, the bank informed her that she would be put into a “forced” modification program, which would change the terms of her loan by raising the interest rate.
Despite the bank’s tactics, the homeowner nonetheless agreed to make the payments. She made two payments, but did not sign the modification agreement with the raised interest rate. The bank, showing its heartlessness or its complete ineptitude, then rejected her third payment.
Foreclosure and Countersuits
The bank foreclosed, and the homeowner sued the bank for failing to honor the terms of the forbearance agreement. However, the bank, in a classic “bait and switch” move, noted that the forbearance plan said that the delayed payments would have to be repaid under an “approved” modification plan. In other words, the bank contended that if a homeowner accepted the forbearance, that the homeowner was also accepting the terms of a new modification agreement with a higher interest rate.
The bank also claimed that it was legally allowed to ask for all three months that were in forbearance, immediately at the completion of the three month period, as it did.
Court Dismisses Suit
The Court dismissed the homeowner’s lawsuit. The Court noted that the promise to add the payments onto the end of the loan were made orally—they were not a part of the written forbearance agreement. By law, agreements to forebear a debt must be in writing to be valid.
Furthermore, the Court noted that the bank did not assess any interest or any penalty on the homeowner for missing the three payments in forbearance. As such, the Court found the bank honored the terms of the forbearance agreement.
Make sure an attorney reads any settlement agreements or modification agreements that you sign with your bank. Contact Jacobs Legal to speak with one of our Miami consumer rights attorneys today.