Financial Services Litigation Bulletin-July 2010
Lenders Prevail in Lawsuits by Borrowers Seeking to Enforce Federal Loan Modification Programs
Frustrated by depreciating property values and failed attempts to modify their loans, distressed borrowers continue to file lawsuits against their lenders and others as a means of redress. In their search for viable legal theories, plaintiffs and their attorneys have now tried a new breed of claim with its roots in the federal programs designed to encourage loan modifications. While details vary from case to case, borrowers generally assert that their servicers are not abiding by the requirements of federal loan modification programs and related participation agreements. They claim that their servicers are foreclosing without considering their modification eligibility, and are improperly assessing their eligibility for relief.
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