What happens if a loan modification is denied to to the lender’s error in computing income and the home is then sold?

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What happens if a loan modification is denied to to the lender’s error in computing income and the home is then sold?

We had not paid on our mortgage due to my income reduced by furloughs with the state and medical issues. We requested a loan modification and it was denied it on 5 weeks ago. Our home was sold last week. They denied our request because they calculated our income incorrectly. What can we do?

Asked on May 4, 2011 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Unfortunately, you probably cannot do anything. The main problem is that loan modifications are voluntary, not of right; that is, bank's are not forced or compelled to make modications (even if they are encouraged to do so). Since there is no right to a modification, there is no duty for the bank to provide one and therefore no claim if the bank fails to grant a modification for any reason. In addition, even if there was some duty, it would be very hard to show causality; banks have so much discretion in the criteria they apply, it might be almost impossible to prove or establish that if your income had been calculated correctly, that you would certainly have received a modification. Remember: *very* few people who request modifications actually get  them.


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