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It is an all too common scenario. A homeowner applies for a modification and receives the letter from the lender congratulating him or her and providing a trial period modification agreement. The agreement says that the homeowner must make three payments and then he or she will receive the permanent modification. Very excited and relieved, the homeowner makes the three required modification payments, and usually more, waiting with bated breath for that final agreement. But that agreement never comes. Eventually, the lender stops accepting the trial payments and ultimately starts foreclosure proceedings.

Numerous trial courts have ruled that until that elusive permanent modification agreement is issued and signed, there is no agreement to enforce and the homeowner is out of luck. Addressing that insanity, a recent New Jersey appellate court has ruled that a trial period modification agreement is a contract that can be enforced by the homeowner.

In Arias v. Elite Mortgage Group, Inc. , the New Jersey Appellate Division ruled that where the only conditions that have to be satisfied prior to the issuance of the permanent modification are monthly payments by the homeowner and verification that the income information is correct, and those conditions are met, a binding contract does exist. While the homeowners in the Arias case were found not to have complied with their obligations and lost the appeal, the court's decision clearly provides that when the homeowner does exactly what is required of him or her under a trial period modification agreement, the bank must provide the permanent modification.

This decision is good news for homeowners in New Jersey who face this all too common situation. The lawyers at Levitt & Slafkes, P.C. have long been fighting to enforce these trial period modification agreements for our clients. If you are a homeowner in this situation, or have been denied enforcement of an agreement, but are still in your home, feel free to contact us to see if we can help you save your home.

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