Carl Kanowsky, Esq.
I’m no fan of Bank of America. I thought its plan to charge its customers a fee just to get their own money was a bit over the top. And In my practice, I’ve gotten numerous phone calls from homeowners bemoaning the harsh treatment they claim they’ve received from Bank of America.
But there’s a recent court decision (Nungaray v. Litton) where, amazingly, Bank of America won – and I agree with the decision.
Ruben and Dora Nungaray bought a home in Simi Valley. In 2006, the Nungarays refinanced their property and executed a promissory note for $500,000 and a deed of trust securing the obligation.
Things were going fine until 2009, when the Nungarays failed to pay the mortgage. Apparently, they hired an attorney who tried to work things out with the bank.
Feeling pressure from Washington – especially after reportedly taking a Troubled Asset Relief Program (TARP) handout of $20 billion – Bank of America participated in a program to work with folks having problems paying their mortgages. (For Bank of America, this must seem like a classic case of the shoe being on the other foot.)
So, when the Nungarays approached the bank about working out some type of modification, they initially received what seemed like a favorable response from the bank.
The couple was sent a loan workout plan, a document that perhaps gave some confusing information. For instance, it said: “If I am in compliance with this loan workout plan … and my representations in Section 1 (regarding ownership of the property and documentation of financial hardship) continue to be true in all material respects, then the lender will provide me with a loan modification agreement.”
So, great. It looked like the Nungarays were on their way to some real relief. But I guess they didn’t read the entire document, or at least they didn’t read it carefully. Now, if you’ve been reading my column for a while, what do I always say? Do not sign anything without reading and understanding it.
You see, further in the plan, the Nungarays agreed to provide some financial data to prove they were having severe economic difficulties that would warrant the loan modification.
In defense of Bank of America, it gave the Nungarays almost six months to send paycheck stubs, tax returns and other documents. For whatever reason, that did not happen.
Bank of America finally gave up and removed the hold on the foreclosure process. Unfortunately for the Nungarays, their home was foreclosed and sold to the bank in 2009.
I guess they didn’t read the plan closely enough. When the Court of Appeal considered their argument that signing up for the plan was equal to a loan modification, the court ruled the plan “is not a modification of the loan documents, and the documents will not be modified unless the Nungarays” meet all of the conditions required for modification, including the Nungarays’ receipt of a “fully executed copy of a modification agreement. The plan also required the Nungarays to submit financial information regarding their hardship and states that Litton and the bank would determine whether they qualify(ied) for the offer.”
The court sided with Bank of America’s argument that the plan was a temporary fix, not a permanent one, and that the plan told the Nungarays in no uncertain terms that this was the case.
Remember, if a contract doesn’t say something you think it should, then unless you force it in, a court later will not add it in for you later.
Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He can be reached by email at cjk@kanowskylaw.com. Nothing contained herein shall be or is intended to be construed as providing legal advice.
Beware the Loan Modification That Is Not | Commentary by Carl Kanowsky, Esq.
