Modifications on My Mind: When “Will” Means “Must” and a Conventional Hand Signature is Not Required
August 30, 2018
Authored by: Jim Goldberg
The Sixth Circuit has issued another opinion regarding loan modifications, following its opinion two weeks ago in Segrist v. Bank of New York Mellon (2018 WL 3773785, August 9, 2018), on which I earlier wrote.
Now, in Pittman v. Experian Information Solutions, Inc. — F.3d —- 2018 WL 4016604, August 23, 2018), the Sixth joins the First, Seventh, Ninth, and Tenth Circuits, in holding that loan servicers are contractually obligated under the terms of their Trial Modification Plan (“TPP”), pursuant to the Home Affordable Mortgage Program (“HAMP”), to offer a permanent modification to borrowers who comply with the TPP by submitting accurate documentation and making trial payments.
The Court relied on language in the TPP that said, “[a]fter all trial period payments are timely made and you have submitted all the required documents, your mortage will be permanently modified.” The court noted hornbook contract law that “the mere fact that an offer or agreement is subject to events not within the promisor’ control … will not render the agreement illusory.”
Additionally, the TPP was sufficiently definite to constitute an enforceable contract, even though it did not set the precise terms for the permanent modification, because HAMP guidelines provide the existing standard by which the ultimate terms of the permanent modification were to be set in order to bring down the monthly payments to 31% of gross income.
The Court also found that the TPP might satisfy the statute of frauds’ requirement that it bear an authorized signature of the party to be charged with the promise, even though there was no actual hand-written signature of an individual representing the loan servicers. The Court noted Michigan law that “any symbol executed or adopted by a party with the present intent to authenticate a writing may serve as a signature.” Thus, the printed name of a financial institution at the bottom of documents tendering promises may “satisfy the signature requirement of the statute of frauds so long as the party typing the institution’s name intends to authenticate the documents and is authorized to do so.”
The Court reversed in part the granting of the loan servicers’ motions for summary judgment and remanded for further proceedings, in part to determine the intent of the signatory.