When is a loan modification that reduces the borrower’s interest rate fraudulent and not “benevolent” under the UCC? Maybe when the lender extends the loan repayment period or procures a guaranty from HUD, according to one federal district court.
A husband and wife took out a mortgage. After their divorce, the ex-wife agreed with the lender to modify the mortgage to lower the interest rate by 2%, allegedly without the knowledge or consent of her ex-husband. The lender considered the husband obligated to make the modified mortgage payments and reported him to credit reporting agencies when payments were missed.