The Recently Passed CARES Act Requires Banks To Allow Many Borrowers To Skip Up To A Year’s Worth Of Mortgage Payments
The recently passed CARES Act requires banks to allow many borrowers to skip up to a year’s worth of mortgage payments or lower the amount of monthly mortgage payments. This is great news for borrowers, but if history is any lesson, borrowers need to proceed with caution. Two recent rulings in lawsuits handled by Steele Law highlight why borrowers need to be especially vigilant when negotiating loan modification agreements with their banks.
During the 2008 mortgage meltdown and resulting recession, many borrowers were lured by banks into signing similar mortgage modification agreements. St. Lucie County residents Benita Cottrell and Joseph Akowskey both signed loan modification agreements with Bank of America in 2012 and 2013. In both agreements, the bank agreed to accept reduced monthly mortgage payment for the remainder of their loans. In both cases, the banks decided over a year later to refuse to accept the reduced payments from Ms. Cottrell and Mr. Akowskey because the banks claimed paperwork wasn’t filled out correctly. Bank of America then sold their loans to new banks who also refused to honor the modification agreements. The banks sued both Ms. Cottrell and Mr. Akowskey claiming the modification agreements weren’t binding. Ms. Cottrell and Mr. Akowskey are both disabled and on fixed incomes and the banks’ lawsuits against them were devastating. Both hired Steele Law to represent them.
In both cases, the banks refused to settle, and the cases went to trial. The courts found that the banks acted unfairly and ordered the banks to honor the terms of the modifications because the banks had accepted months of modified payments. After the banks’ lawsuits were dismissed, Steele Law and the borrowers reached out to the banks to resume making the modified mortgage payments. Incredibly, the banks again took the position that the loan modification agreements were invalid because of missing paperwork and refused to accept the borrowers’ payments. The banks insisted both borrowers either reapply for new loan modifications (with less favorable terms) or surrender their homes. Both refused.
Within months both banks filed new lawsuits against Ms. Cottrell and Mr. Akowskey, who both hired Steele Law to again represent them. Once again, the banks refused to settle, and the cases went to trial. In both cases, the trial judge ruled that the banks again acted improperly by refusing to follow the court’s rulings in the earlier cases that the loan modifications were valid and that the banks could not refuse to accept the borrowers’ payments. After the cases were tried, Steele Law assisted Ms. Cottrell and Mr. Akowskey in forcing the banks to accept the borrowers’ mortgage payments under the terms of their original loan modification agreements.
Both Ms. Cottrell and Mr. Akowskey are now considering filing suit under Florida’s Consumer Collection Practices Act.