Can I sue a bank for delaying what should have been a fast andeasy loan modification?

My house was in foreclosure. Due to the economy payments could not be made. A lawyer was hired to work out a loan modification with the bank in order to keep the house and just lower monthly payments. It has been 2 years since this process started, we’ve gone to meet with their lawyers in “arbitration” twice. In the two years the bank continues to delay the process, asking for more paperwork, not giving a definitive yes or no answer, and are currently on their third attempt to sell the house tomorrow. I have spent a lot of time and money trying finish this. Do I have a case against the bank?

Asked on October 12, 2011 under Real Estate Law, Florida


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Unfortunately no, you almost certainly do *not* have a legal claim. Banks are under *no* obligation whatsoever to modify loans, or even to consider modifications, discuss it with borrowers, etc.; while banks are encouraged by various mechanisms to do this, they are not required to do so. When there is no obligation, there is no legal duty and hence no law suit for failing in that duty. If the bank had ever contractually committed to either providing--or at least answering about whether you'd get--the modification by a certain date, that would be a different story: that contractual obligaiton could be enforced. And *possibly* even if there was no actual contract or agreement, but the bank definitively promised to get the work done by a certain date and knew or should have known you'd spend money in reasonable reliance on that promise (which assumes that relying on what the bank said was reasonable), you may be able to enforce the promise. But in the absence of an agreement or at least a firm promise which you reasonably relied on (and which the bank knew  you'd spend money on in reliance), there is almost certainly no bank liability.

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