9th Circuit Makes Wells Fargo Live Up to HAMP Contract
In Corvello v. Wells Fargo, the homeowner, Mr. Corvello, applied for a mortgage modification under the federal Home Affordable Modification Program (more commonly known as HAMP). Lenders, like Wells Fargo, that choose to participate in HAMP must comply with program rules. (To learn more about HAMP, see the articles in Nolo’s Federal Making Home Affordable Programs topic page.)
In order to get a permanent modification, the homeowner must comply with the terms of a trial period plan -- which entails providing certain documents to the lender and making trial payments. Mr. Corvello provided all requested documents and made all payments. According to HAMP rules, the lender must then either (1) notify the homeowner that he does not qualify for HAMP, or (2) offer a permanant mortgage modification under HAMP.
In this case, Wells was silent -- it never sent notice to Mr. Corvello that he was not eligible for HAMP. And yet at the same time, Wells refused to offer Mr. Corvello a permanent mortgage modification.
The Ninth Circuit Court of Appeals said that this was not OK. It ruled that Wells Fargo must offer homeowners a permanent mortgage modification under HAMP where:
- the homeowner provides all of the documents required under the trial period plan (TPP)
- the homeowner makes all payments required under the TPP, and
- Wells Fargo does not notify the homeowner that he or she does not qualify for HAMP.
To learn more about the facts of the case and the ruling, see Nolo's blog 9th Circuit Tells Wells Fargo: You Can't Have Your Cake and Eat it Too.
The bottom line: If you apply for a mortgage modification under HAMP, your mortgage holder must comply with the rules of the program. If you live up to your part of the bargain (by providing all documents and payments pursuant to the TPP), then the mortgage holder must stick to its part of the bargain -- either tell you why you are not eligible for HAMP or else offer a permanent mortgage modification.