CASE STUDY 7

Arias v. Elite Mortg. Grp., Inc., 439 N.J. Super. 273, 108 A.3d 21 (Super. Ct. App. Div. 2015)  January 23, 2015, Decided Approved for Publication January 23, 2015.  


Before reviewing the record and setting forth our own legal analysis, we briefly discuss the most pertinent case law on which the parties rely. In Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir.2012), the court cogently explained the federal HAMP program, which was designed to address the residential mortgage foreclosure crisis by encouraging lenders to extend loan modifications to qualified mortgagors. Id. at 556-57; seeEmergency Economic Stabilization Act of 2008, 12 U.S.C.A. § 5219(a)(1). The court concluded that, even though there is no private cause of action under HAMP, a mortgagor may nonetheless assert a common-law contract claim based on a bank's failure to honor promises made in a HAMP Trial Period Plan Agreement. The court reasoned  [**23]  that the terms of the TPP Agreement must be construed as a promise by the bank that if the debtor complies with its terms, she will be offered a loan modification. The court thus described the TPP Agreement as including "a unilateral offer [***4]  to modify Wigod's loan conditioned on her compliance with the stated terms of the bargain." Wigod, supra, 673 F.3d at 562. The court reasoned that "a reasonable person in Wigod's position would read the TPP as a definite offer to provide a permanent modification that she could accept so long as she satisfied the conditions." Ibid.; see also Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878, 883-85 (9th Cir.2013); Young, supra, 717 F.3d at 234; Bosque v.  [*277]  Wells Fargo Bank, N.A., 762 F. Supp. 2d 342 (D.Mass.2011); West v. JPMorgan Chase Bank, N.A., 214 Cal. App. 4th 780, 154 Cal. Rptr. 3d 285 (Ct.App.), rev. denied, 2013 Cal. LEXIS 5801 (July 10, 2013). 
 

The court rejected the bank's argument that there was no consideration for a promise to grant a loan modification because the debtor was merely making a partial payment of a debt she already owed. Wigod, supra, 673 F.2d at 564. The court pointed out that in entering into the TPP Agreement, the debtor agreed to provide additional financial information and agreed to attend debt counseling if asked to do so. Ibid.; see Seaview Orthopaedics v. Nat'l Healthcare Res., Inc., 366 N.J. Super. 501, 508-09, 841 A.2d 917 (App.Div.2004) (discussing adequacy of consideration). The court also rejected the bank's argument that the TPP Agreement left to the bank's sole and unbridled discretion whether to actually send the debtor a loan modification agreement once [***5]  she complied with her obligations under the TPP Agreement. The court found that such an interpretation would render the TPP Agreement illusory. Wigod, supra, 673 F.3d at 563. 

While there are no reported New Jersey cases addressing the contractual status of a TPP Agreement, case law suggests that an agreement that purports to bind a debtor to make payments while leaving the mortgage company free to give her nothing in return might violate the New Jersey Consumer Fraud Act (CFA), N.J.S.A.56:8-1 to -195. See Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 576-78, 25 A.3d 1103 (2011). Gonzalez involved a different factual scenario from the one in this case. However, in Gonzalezthe Court strongly signaled its disapproval of post-foreclosure financing deals that essentially turned debtors into "cash cows" without ever restoring their mortgages to current status. Id. at 570, 582-83, 25 A.3d 1103. 
 

 [*278]  Wigod and Gonzalez were decided in different procedural postures than the case before us. Wigod involved a motion to dismiss on the pleadings. Gonzalez involved summary judgment granted due to a mistaken interpretation of the CFA. In remanding [***6]  for trial, the Court noted that there were material factual issues and plaintiff's factual claims "still must survive the crucible of a trial." Gonzalez, supra, 207 N.J. at 586, 25 A.3d 1103. In this case, the undisputed facts permitted the trial court, and permit us as well, to decide the merits. 



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