Loan Servicer Pockets Three Months Of Loan Modification Payments, Then Forecloses Home Out From Under Unwitting Borrower Anyway

In Ceres, California, KXTV-TV Channel 10 reports:

• After struggling for more than a year to get their house payments reduced, Carol Ann Rangel received formal notification from Citimortgage in May that her family had been approved for a loan modification.

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• News10 first featured the Rangels in November, 2008, as they began the long process of seeking a loan modification. The letter from Citimortgage was dated May 20, 2010:
  
  Congratulations! You are approved to enter into a trial plan under the Home Affordable Modification Plan! This is the first step toward lowering your mortgage payments. If you make your new payments timely . . . we will not conduct a foreclosure sale.

• Rangel provided News10 with banking statements showing electronic payments to Citimortgage in the amount of $723.15 on June 1, June 29 and July 29.

• Rangel called Citimortgage on Aug. 30 because she had not received a coupon for the September payment. That's when she learned her home had been sold at auction 11 days earlier. "I never received a letter, never received a phone call, never received any notice that my home was being auctioned," Rangel said.

For more, see Ceres homeowner's loan modified; house auctioned anyway.

(1) This homeowners and others who are similarly situated could have a claim against the loan servicer to enforce its promise to hold off on foreclosure, even if not contractually obligated to do so. For more, see Court: "Promissory Estoppel" Could Make Lender’s Verbal Agreement To Halt F'closure Sale Enforceable, Even Absent Consideration For Promise To Stall.