Mortgagor Has No Right Or Standing To Enforce The HAMP Regulations Against A Servicer Who Refused To Modify A Loan

The Home Affordable Modification Program (HAMP) has lately been cited by disgruntled mortgagors who did not receive a loan modification to their liking. The latest of these cases has gone the way of almost all the rest: mortgagors are not third party beneficiaries under the program so they have no enforceable rights. In Hoffman v. Bank of Am., N.A., C 10-2171 SI (N.D. Cal. June 2010) the Plaintiff sued for breach of the HAMP servicer’s agreement as a third party beneficiary to the contract and claimed he had a private right of action to enforce the HAMP regulations that Defendant allegedly violated. The court followed the nearly dozen other courts which have determined that a borrower is not a third party beneficiary of the HAMP servicer’s agreement. Plaintiff is at most an incidental and not an intended beneficiary to the HAMP servicer’s agreement. It would be unreasonable, the court observed, for a qualified borrower seeking a loan modification to rely on the HAMP servicer’s agreement as granting him an enforceable right since the agreement does not actually require that the servicer modify all eligible loans, nor does any of the other language of the contract demonstrate that the borrowers are intended beneficiaries. The Plaintiff’s attempt to distinguish his case from the other cases was misguided. In addition to claiming a breach of contract for the denial of the loan modification, the Plaintiff also claimed that Defendants had breached the HAMP servicer’s agreement by other means that were not alleged in the other cases. For example, Plaintiff alleged that Defendants did not follow through on written and implied promises of the servicer’s agreement. More specifically, Plaintiff contended that Defendants erroneously instituted foreclosure proceedings while a loan modification application was being processed. The court was not impressed. Not only were the facts in those cases identical to the facts of Plaintiff’s case but the distinction Plaintiff attempts to raise was of no consequence. The only contradictory district court case cited by the Plaintiff, _Reyes v. Saxon Mortg. Servs.,_ No. 09cv1366 DMS (WMC) (S.D.Cal. November 5, 2009) was deemed unhelpful as there was no analysis to support the decision and, more importantly, the judge who decided Reyes rejected the third party beneficiary argument in a subsequent case based on detailed analysis of the contract at issue.

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