Appeals Court Rules in Favor of Massachusetts Homeowner

Appeals Court Rules in Favor of Massachusetts Homeowner

Reviewing a Massachusetts homeowner’s trial loan modification agreement with her mortgage bank, an appeals court ruled in Young v. Wells Fargo Bank, N.A. (Case no. 12-1405) that the homeowner was entitled to a permanent loan modification.

The homeowner’s loan modification was offered under the federal Home Affordable Modification Program (HAMP). HAMP was created as part of the bank bailout from the recent financial collapse. Banks accepted billions in taxpayer dollars in exchange for their promises to provide eligible homeowners with loan-modification agreements that would modify their mortgages to create more affordable monthly payments.

Under HAMP, a homeowner is first provided with three-month trial loan modification called a trial period plan (TPP), to ensure that the new modified payment is affordable. After the homeowner makes the three payments, the bank is required to provide a permanent loan modification.

Banks, however, have repeatedly failed to provide homeowners with the promised loan modifications, resulting in numerous class-action and individual lawsuits. When homeowners have filed lawsuits against their banks to obtain the permanent modifications, banks argued that the trial modifications did not require providing permanent modifications.

In this case, the homeowner received a TPP, but her bank failed to provide her with a permanent loan modification. She filed a lawsuit, and her bank argued that she was not entitled to the permanent agreement.

Rejecting with the bank’s argument, the First Circuit Court of Appeals (the federal court of appeals covering Massachusetts) reversed the decision of the lower court against the homeowner, and allowed her to continue with her lawsuit.

The appeals court held that a homeowner should receive a permanent loan modification if all three trial payment were made. The court called the bank’s actions “unthinking and sloppy.” The court also held that the bank’s was unfair and deceptive, violating the Massachusetts Consumer Protection Act, Chapter 93A.

Although courts in Massachusetts have generally decided in favor of homeowners in prior cases involving TPPs, this case is the first decision from the First Circuit Court of Appeals involving this issue.

The text of the opinion is available at



CULIK LAW PC is a consumer protection law firm helping individuals Champion Your Rights. Based in Boston, Massachusetts and Charlotte, North Carolina, we help clients with debt defense, mortgage litigation, foreclosure defense, consumer protection, and employment related matters. We have gone against the largest banks and debt collectors on our clients' behalf, saved hundreds of homes from foreclosure, and have settled thousands of debts for significantly less than owed or had the debt dismissed altogether.