BAC v. FICCO | NJ APPELLATE DIV. - "promise of a loan modification, only to eventually pull the rug out from under them"


BAC v. FICCO | NJ APPELLATE DIV. – “promise of a loan modification, only to eventually pull the rug out from under them”

BAC v. FICCO | NJ APPELLATE DIV. – “promise of a loan modification, only to eventually pull the rug out from under them”


DOCKET NO. A-4756-10T4



Argued January 31, 2012 – Decided
Before Judges Payne and Reisner.

On appeal from the Superior Court of New
Jersey, Chancery Division, General Equity,
Morris County, Docket No. F-24872-08.

Jeanette J. O’Donnell argued the cause for
appellant (Powers Kirn, L.L.C., attorneys;
Ms. O’Donnell, on the brief).

Richard H. Kotkin argued the cause for


In this residential foreclosure case, plaintiff BAC Home
Loan Servicing, L.P. (formerly Countrywide Home Loans, Inc.)
appeals from a February 25, 2011 order, granting a motion by
defendant Sylvia T. Ficco to enforce a loan modification, and a
May 9, 2011 order denying plaintiff’s motion for

We agree with Judge Stephan C. Hansbury that defendant
mortgagor presented legally competent evidence that by letter
dated March 30, 2010, plaintiff mortgagee approved her
application for a loan modification, and that she accepted
plaintiff’s offer by continuing to make payments under the loan
modification offered to her. We also agree with the trial judge
that plaintiff failed to present legally competent evidence to
support its claim that the March 30, 2010 letter granting the
loan modification was sent in error. We therefore affirm the
orders on appeal, substantially for the reasons stated by Judge
Hansbury in the written statements he issued with those orders.

The relevant events can be summarized briefly as follows.

In April 2007, defendant took out a home loan of nearly $600,000
secured by a thirty-year mortgage on her home. She defaulted
and plaintiff filed a foreclosure complaint in June 2008. In
October 2009, plaintiff accepted defendant’s application for a
loan modification. As part of that process, the parties entered
into a Home Affordable Modification Trial Period Plan, and
plaintiff sent defendant an October 12, 2009 letter encouraging
her to “start your three-month trial period for your mortgage
loan modification.” The documents in the record show that as
part of that Plan, plaintiff represented to defendant that if
she provided a list of requested financial information, and if
that information was found acceptable, and she made her
payments, she would be approved for a permanent loan
modification. By letter dated March 30, 2010, plaintiff advised
defendant that she had qualified for a permanent loan
modification, and that she would shortly receive the
Modification Agreement to sign. The letter “strongly
encourage[d]” her to keep making her payments under the plan,
which she faithfully did. Plaintiff cashed her payment checks.

Although defendant continued to make her payments, seven
months later, on November 22, 2010, plaintiff changed its
position and sent defendant a letter advising that she was not
eligible for a loan modification after all. The letter did not
mention any failure by defendant to submit information, sign
documents, or otherwise cooperate in the modification process.
Instead, the letter asserted that plaintiff’s calculation of the
“net present value of a modification” revealed that modifying
the loan would not be “in the financial interest of the investor
that owns your loan.”

On November 23, 2010, defendant filed a motion to enforce
the loan modification. Defendant’s motion was supported by her
November 22, 2010 certification, attesting to plaintiff’s offer
of the loan modification and the March 30 letter, attesting that
she had made “all of the required mortgage payments from
November, 2009, to the present,” and properly authenticating
copies of all of her canceled checks for those payments.
Plaintiff filed a two-page letter brief in opposition. The
judge found that plaintiff failed to submit any legally
competent evidence to support its opposition to defendant’s
motion, and that the letter from plaintiff’s counsel was
“uncertified hearsay.” Noting that defendant had made all of
her payments, pursuant to the March 30, 2010 letter telling her
that she qualified for the loan modification, the judge held
that plaintiff was bound by its March 30 offer and defendant’s
acceptance of that offer.

Plaintiff filed a motion for reconsideration, consisting of
a brief with some unauthenticated documents attached. The trial
judge denied the motion, noting once again the lack of competent
evidence to support plaintiff’s original motion opposition or
its reconsideration motion. This appeal followed.

In its appeal, plaintiff contends that there was no
enforceable loan modification because “there was never a meeting
of the minds,” primarily because the March 30 letter was sent
“in error.” Alternatively, plaintiff argues that the trial
period offer was conditional and not an enforceable offer until
further documents were presented and signed; and plaintiff never
offered defendant a “permanent loan modification.” At oral
argument of this appeal, plaintiff’s counsel candidly admitted
the obvious – the record contains no legally competent evidence
to support plaintiff’s central claim that the March 30 letter
was sent in error. Celino v. Gen. Accident Ins., 211 N.J.
Super. 538, 544 (App. Div. 1986) (“Facts intended to be relied
on which do not already appear of record and which are not
judicially noticeable are required to be submitted to the court
by way of affidavit or testimony” rather than by merely
attaching them to a brief.) In fact, plaintiff did not properly
authenticate any of the documents it submitted to the trial
court. Ibid. Plaintiff also improperly submitted a reply brief
to this court attaching documents it did not submit to the trial
court and asserting arguments it did not make before the trial
court. See R. 2:5-4(a); Nieder v. Royal Indem. Ins. Co., 62
N.J. 229, 234-35 (1973).

On this record, we find plaintiff’s appellate arguments are
without sufficient merit to warrant further discussion, beyond
the following comments. R. 2:11-3(e)(1)(E). The March 30 letter
constituted an offer, which defendant accepted. Whether we
consider this interchange as the modification of a contract or
as the binding settlement of litigation, the result is the same.
Plaintiff was bound to fulfill the offer that defendant
accepted. Further, even if the March 30 letter were sent in
error, we would be inclined to find that plaintiff was equitably
estopped from denying defendant the benefit of the bargain,
because she reasonably relied to her detriment on that letter in
making continued payments. Knorr v. Smeal, 178 N.J. 169, 178

Unlike the unpublished federal court decision plaintiff has
cited to us, defendant’s claim is not based merely on her having
made payments under a trial period plan, but on plaintiff having
unequivocally notified her that she qualified for the loan
modification, and having induced her to make continued payments
based on that promise. We emphasize that the obligation we find
here, to provide defendant with a loan modification, lies with
plaintiff. If plaintiff wishes to avoid alleged problems with
the federal loan modification program, as represented to us at
oral argument (albeit with no supporting legally competent
evidence), our decision does not preclude plaintiff from
offering to directly refinance defendant’s mortgage through an
“in house” loan.

Finally, we observe that inducing debtors to continue
making mortgage payments over an extended period of time, on the
promise of a loan modification, only to eventually pull the rug
out from under them when they are unable to satisfy criteria
beyond prompt continuing payment of the mortgage, borders on


1 We confess some puzzlement at why a mortgage company would
continue foreclosure proceedings against a debtor who, unlike
many, is actually paying her mortgage. The “net present value”
investment formula seems divorced from the current reality,
which is that foreclosure is unlikely to yield a higher
investment return than keeping in place a “paying” mortgage. We
emphasize, however, that our decision of this appeal does not
turn on any of those observations, but on the application of
legal and equitable principles to the evidentiary record before

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