Court Finds Loan Modification Agreement Enforceable Even Though Lender Did Not Sign

Posted on 03/31/2017 at 03:40 pm by Viewed 489 times

In Carson v. Ocwen, Litton, and Bank of New York as Trustee, the U.S. Federal District Court of Maine found that a loan modification agreement that the Carsons signed, returned, and made years of payments on was indeed enforceable even though the lender or servicer did not sign it.  

The Court found

The plain language of the executed Commitment Letter and the Modification Agreement that accompanied it show that Litton made an offer and that the Carsons accepted it. There was a meeting of the minds, and no material terms and conditions are missing in the documents such as would prevent enforcement of that agreement.

Here, Litton made a fully detailed written offer, the Carsons accepted it in writing, and the Carsons did not attempt to change any of the terms that Litton offered. Once bankruptcy court approval was obtained, all the terms and conditions within the Carsons control were satisfied.

Since the offer was never withdrawn, the Servicer at that point was contractually obligated to sign the Modification Agreement. Indeed, Ocwen's 30(b)(6) designee Crystal M. Kearse testified at her deposition that the signature requirement is "normally . . . ministerial" and accomplished within 30 days after bankruptcy court approval is obtained.

The defendants' argument:If accepted, the defendants' argument would make Litton's original offer wholly illusory. Simply by choosing not to sign the document-for no valid reason-the Servicer could revoke its detailed written offer that had been accepted. That is not the law on offer and acceptance.

[T]he Modification Agreement was enforceable and [ ] the Servicer could be compelled to sign it.

The Case will now go to trial sometime in June on the counts of alleged violation of the Bankruptcy Automatic Stay and Discharge violations, Fair Debt Collection Practices Act, Real Estate Settlement Procedures Act, Fraudulent Misrepresentation, Maine Unfair Trade Practices Act, Breach of Contract, and Promissory Estoppel.

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