Homeowners who enter into trial agreements to modify their mortgages under the federal Home Affordable Modification Program (HAMP) and comply with the terms can sue for breach of contract if a modification is denied and might even have a consumer fraud claim, a New Jersey appeals court has held in a precedential decision of first impression.
“While there are no reported New Jersey cases addressing the contractual status of a [Trial Period Plan] 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,” Judge Susan Reisner, joined by Ellen Koblitz and Michael Haas, said in the Jan. 23 ruling in Arias v. Elite Mortgage Group Inc.
