1. Explain what happened to the Laughlins in the loan modification process.

2. How does the loan modification fall under the consumer protection statute that applies to contracts?

Robert and Sheryl Laughlin (Plaintiffs), who were having difficulty making their mortgage payments, applied for a HAMP modification with Bank of America, NA (BANA). HAMP is the federal Home Affordable Modification Program, a program that was one of several assistance programs created in an effort to stem the foreclosure crisis. HAMP is intended to lower a qualifying mortgagor’s monthly payments to 31 percent of the [borrowers’] verified monthly gross income in order to make payments more affordable. After months of delay and inconsistent responses, BANA informed the Laughlins that they qualified for the HAMP program and would be placed in a trial period plan. BANA told the Laughlins that if they accepted a trial period plan under HAMP, they would be ineligible to short sell their house. The Laughlins opted out of the proposed HAMP modification plan in order to remain eligible for a short sale.*

A BANA representative then advised the Laughlins to accept a HAMP modification instead of attempting a short sale, but they were not allowed to have the previously offered HAMP Trial Plan reinstated. On April 11, 2012, the Laughlins resubmitted the necessary financial documentation required in order to be considered for a modification. On June 21, 2012, the Laughlins received a Notice of Intent to Foreclose. On that same day, the Laughlins received a phone call from a BANA representative, informing them that they were denied a loan modification and would need to make at least one monthly loan payment in order to qualify for any mortgage assistance programs. On June 25, 2012, the Laughlins made this payment.

On August 15, 2012, the Laughlins received a Federal Housing Agency (“FHA”) Trial Period Plan Agreement (“TPP”). On the same day, Robert Laughlin spoke with a BANA representative about his concern regarding the calculation of the amount due under the loan. Robert Laughlin believed that a portion of the principal balance was being “doublecounted” because BANA was adding unpaid principal on top of the balance due on the loan. A BANA representative informed them that this was how the calculation was done. The Laughlins then [accepted the TPP].

Under the terms of the TPP, the Laughlins were obligated to make three monthly payments on or before September 15, 2013; October 15, 2013; and November 15, 2013. The Laughlins made the payments, and on November 30, 2012, were told that their loan modification request was under review and that they would receive a final loan modification within 30–45 days. They were advised to continue making the monthly trial payments in the meantime. On January 2, 2013, BANA acknowledged the Laughlins’ compliance with the FHA Trial Plan Agreement and advised in writing to continue making trial payments until a final loan modification was processed. They received their permanent loan modification offer on April 10, 2013. The terms of the permanent loan modification offer had a modified principal balance of $680,042.78. Before the modification, their loan balance was $617,735.87. The proposed modified loan also extended the term of the loan for 30 years, providing that the loan would now mature on November 1, 2042. Finally, the proposed permanent loan modification included a balloon payment of $25,013.27, which BANA said reflected the “missed” payments from the period between the end of the TPP and before the permanent loan modification offer. ………………..