In March of 2012, the U.S. Court of Appeals for the Seventh Circuit issued its decision in Wigod v. Wells Fargo Bank. Lori Wigod was a borrower who sued her servicer on numerous theories, alleging that she was entitled to a loan modification under HAMP. Wigod alleged, in essence, that her servicer promised her a loan modification if she successfully completed a HAMP trial modification. The Seventh Circuit held that Wigod had no private cause of action to enforce Treasury Directives issued as part of HAMP, but that she nevertheless successfully pled a cause of action for breach of contract and also promissory fraud under Illinois’ consumer fraud statute.
Many thought that counterclaims for breach of contract and fraud would proliferate under Wigod, where HAMP applications were denied. It has now been a year and therefore it is possible to begin to assess the impact of Wigod.