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Modifications on My Mind: When “Will” Means “Must” and a Conventional Hand Signature is Not Required

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.

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Financial Services Update – March 4, 2011

February Unemployment Falls to 8.9%

On Friday, the Department of Labor reported that the nation added 192,000 jobs in February, up from a gain of 63,000 in January. The unemployment rate was down to 8.9 percent, falling below 9 percent for the first time in nearly two years. Altogether, 13.7 million people are unemployed and actively looking.  A broader measure of unemployment, which includes people working part-time because they could not find full-time jobs and those so discouraged that they have given up searching, was listed at 15.9 percent in February, down from 16.1 percent in January.

Congress Passes Stopgap Funding Measure

This week the House and Senate passed a continuing resolution funding the government until March 18, thereby avoiding a government shutdown and cutting $4 billion from current fiscal year spending. House Majority Leader Eric Cantor (R-VA) said Thursday that House Republicans plan to keep cutting spending at a rate of $2 billion a week, through two-week spending bills, until the Senate makes clear its position on a budget for the rest of FY 2011. House Republicans last month passed a bill to finish out the fiscal year, cutting $61 billion from 2010 levels. However, President Obama has issued a veto threat on that bill, saying House Republicans’ cuts are unacceptable. Senate Democrats have said that the non-spending “policy” provisions of the House Republicans’ bill regarding the environment and healthcare will also have to be struck before an agreement can be reached.

SEC Votes to Restrict Bonuses

On Thursday, the Securities and Exchange Commission voted to pass new restrictions on bonuses at large brokers and investment advisers, including hedge funds. The new restrictions are nearly identical to rules proposed by the Federal Deposit Insurance Corp. (FDIC) last month that apply to the banks that the FDIC oversees. The Dodd-Frank Wall Street Reform Act, which mandates the bonus rules, requires seven federal banking regulators to write the rules jointly. The SEC’s proposal will require brokers and advisers with more than $1 billion in assets to disclose the bonus arrangements of their executives, directors and lower-rung employees to the SEC annually. The proposal will also require firms with at least $50 billion in assets to hold half of the bonuses of top executives and heads of business units for three years. Any bonuses would have to be adjusted for losses at the firm after the pay was awarded. A 45-day public comment period follows Wednesday’s vote. A second vote by the commission is required before the proposal can be made final.

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