NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4599-12T1

LEONARDO ARIAS and

RUTH M. PADILLA,

Plaintiffs-Appellants,

v.

ELITE MORTGAGE GROUP, INC.,

RAY SALAZAR, W.M.C. MORTGAGE,

CORPORATION, GE MONEY, GE

CAPITAL, and DEUTSCHE BANK,

Defendants,

and

BANK OF AMERICA, N.A., s/h/a 

BANK OF AMERICA HOME LOANS,

Defendant-Respondent.

______________________________

Submitted December 9, 2014 – Decided

Before Judges Reisner, Koblitz and Haas.

On appeal from the Superior Court of New 

Jersey, Law Division, Bergen County, Docket 

No. L-1316-12

Joseph A. Chang, attorney for appellants 

(Mr. Chang, of counsel and on the brief; 

Jeffrey Zajac, on the brief).

APPROVED FOR PUBLICATION

January 23, 2015

APPELLATE DIVISION

January 23, 2015
2 A-4599-12T1

Reed Smith LLP, attorneys for respondent 

(Aaron M. Bender, of counsel and on the 

brief).

The opinion of the court was delivered by

REISNER, P.J.A.D.

Plaintiffs Leonardo Arias and Ruth M. Padilla1 appeal from 

an April 19, 2013 order granting summary judgment in favor of 

defendant Bank of America, N.A. (the bank). 

To summarize, this case involves a dispute over a mortgage 

securing a loan plaintiffs obtained to purchase a two-family 

house.2 Plaintiffs claim that they had a contractual right to a 

loan modification under the terms of the Trial Period Plan (TPP) 

Agreement they signed pursuant to the federal Home Affordable 

Mortgage Program (HAMP), and they assert that defendant breached 

the contract. In the alternative, they contend that the bank 

violated the covenant of good faith and fair dealing in denying 

them the loan modification. 

 

1 Plaintiffs, husband and wife, both signed the mortgage, but 

only Arias signed the note. We refer to Arias separately when 

discussing documents addressed only to him.

2 There is no dispute that plaintiffs live in one unit and rent 

out the other unit. At his deposition, Arias admitted that, 

even after plaintiffs entirely ceased paying the mortgage, they 

continued collecting between $1200 and $1800 per month from 

tenants. There is also no dispute that at some point plaintiffs 

stopped paying the taxes on the property, contrary to their 

obligation under the mortgage. 
3 A-4599-12T1

The motion judge concluded that the TPP Agreement was not a 

binding contract to modify the loan. The judge found that 

plaintiffs, who are licensed real estate agents, understood that 

the Agreement did not give them any such contractual right. The 

judge reasoned that the bank was not required to provide 

plaintiffs with a loan modification, based on its determination 

that they did not qualify for one. The judge also concluded 

that plaintiffs had "no viable cause of action" under the 

federal HAMP guidelines, or based on the covenant of good faith 

and fair dealing. 

Our review of a summary judgment order is de novo, using 

the same standard employed by the trial court. Gray v. Caldwell 

Wood Prods., Inc., 425 N.J. Super. 496, 499-500 (App. Div. 

2012). Having reviewed the record, we find there were no 

material facts in dispute, and we agree with the trial judge 

that defendant was entitled to judgment as a matter of law. See

Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 

(1995). However, we arrive at that conclusion by a slightly 

different route than the trial court. 

 I

Before reviewing the record and setting forth our own legal 

analysis, we briefly discuss the most pertinent case law on 

which the parties rely. In Wigod v. Wells Fargo Bank, N.A., 673 
4 A-4599-12T1

F.3d 547 (7th Cir. 2012), the court cogently explained the 

federal HAMP program, which was designed to address the 

residential mortgage foreclosure crisis by encouraging lenders 

to extend loan modifications to qualified mortgagors. Id. at 

556-57; see Emergency Economic Stabilization Act of 2008, 12 

U.S.C.A. § 5219(a)(1). The court concluded that, even though 

there is no private cause of action under HAMP, a mortgagor may 

nonetheless assert a common-law contract claim based on a bank's 

failure to honor promises made in a HAMP Trial Period Plan 

Agreement.3 The court reasoned that the terms of the TPP 

Agreement must be construed as a promise by the bank that if the 

debtor complies with its terms, she will be offered a loan 

modification. The court thus described the TPP Agreement as 

including "a unilateral offer to modify Wigod's loan conditioned 

on her compliance with the stated terms of the bargain." Wigod, 

supra, 673 F.3d at 562. The court reasoned that "a reasonable 

person in Wigod's position would read the TPP as a definite 

offer to provide a permanent modification that she could accept 

so long as she satisfied the conditions." Ibid.; see also

 

3 HAMP provides financial incentives for mortgage servicers to 

assist debtors to obtain loan modifications. Wigod, supra, 673 

F.3d at 556; see also Young v. Wells Fargo Bank, N.A., 717 F.3d 

224, 228-29 (1st Cir. 2013). We note that defendant in the case 

before us acted as a loan servicer, but for simplicity, we refer 

to defendant as the "bank."
5 A-4599-12T1

Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878, 883-85 (9th 

Cir. 2013); Young, supra, 717 F.3d at 234; Bosque v. Wells Fargo 

Bank, N.A., 762 F. Supp. 2d 342 (D. Mass. 2011); West v. 

JPMorgan Chase Bank, N.A., 154 Cal. Rptr. 3d 285 (Ct. App.), 

rev. denied, 2013 Cal. LEXIS 5801 (July 10, 2013). 

The court rejected the bank's argument that there was no 

consideration for a promise to grant a loan modification because 

the debtor was merely making a partial payment of a debt she 

already owed. Wigod, supra, 673 F.2d at 564. The court pointed 

out that in entering into the TPP Agreement, the debtor agreed 

to provide additional financial information and agreed to attend 

debt counseling if asked to do so. Ibid.4; see Seaview 

Orthopaedics v. Nat'l Healthcare Res., Inc., 366 N.J. Super.

501, 508-09 (App. Div. 2004) (discussing adequacy of

consideration). The court also rejected the bank's argument 

that the TPP Agreement left to the bank's sole and unbridled 

discretion whether to actually send the debtor a loan 

modification agreement once she complied with her obligations 

under the TPP Agreement. The court found that such an 

 

4 In a related point concerning plaintiff's promissory estoppel 

claim, the court noted she had refrained from other legal 

options she might have pursued, including filing for bankruptcy 

or selling her home. Id. at 566.
6 A-4599-12T1

interpretation would render the TPP Agreement illusory. Wigod, 

supra, 673 F.3d at 563. 

While there are no reported New Jersey cases addressing the 

contractual status of a TPP Agreement, case law suggests that an 

agreement that purports to bind a debtor to make payments while 

leaving the mortgage company free to give her nothing in return 

might violate the New Jersey Consumer Fraud Act (CFA), N.J.S.A.

56:8-1 to -195. See Gonzalez v. Wilshire Credit Corp., 207 N.J.

557, 576-78 (2011). Gonzalez involved a different factual 

scenario from the one in this case. However, in Gonzalez the 

Court strongly signaled its disapproval of post-foreclosure 

financing deals that essentially turned debtors into "cash cows" 

without ever restoring their mortgages to current status. Id.

at 570, 582-83. 

Wigod and Gonzalez were decided in different procedural 

postures than the case before us. Wigod involved a motion to 

dismiss on the pleadings. Gonzalez involved summary judgment 

granted due to a mistaken interpretation of the CFA. In 

remanding for trial, the Court noted that there were material 

factual issues and plaintiff's factual claims "still must 

survive the crucible of a trial." Gonzalez, supra, 207 N.J. at 

586. In this case, the undisputed facts permitted the trial 

court, and permit us as well, to decide the merits.
7 A-4599-12T1

II

As with all contract claims we begin our analysis by 

considering the language of the document in question. See

Cooper River Plaza E., LLC v. Briad Grp., 359 N.J. Super. 518, 

527 (App. Div. 2003). The TPP Agreement is captioned "HOME 

AFFORDABLE MODIFICATION TRIAL PERIOD PLAN (Step One of Two-Step 

Documentation Process)." The first sentence of the Agreement's 

text states: 

If I am in compliance with this Trial Period 

Plan (the "Plan") and my representations in 

Section 1 continue to be true in all 

material respects, then the Servicer will 

provide me with a Home Affordable 

Modification Agreement ("Modification 

Agreement"), as set forth in Section 3.

In turn, Section 3 provides, in pertinent part, that the 

Servicer will determine the amounts of unpaid interest and other 

charges to be added to the loan balance and determine "the new 

payment amount." This section then repeats that:

If I comply with the requirements in Section 

2 and my representations in Section 1 

continue to be true in all material 

respects, the Servicer will send me a 

Modification Agreement for my signature. 

[(Emphasis added).]

Significantly, Section 2 of the TPP Agreement required 

plaintiffs to make three trial period payments of $1860 each, by 

the specified due dates of October 1, 2009, November 1, 2009, 
8 A-4599-12T1

and December 1, 2009. Paragraph 2A notified plaintiffs, in 

capital letters, that "TIME IS OF THE ESSENCE under this Plan." 

Paragraph 2 defined the "Modification Effective Date" as the 

first day of the month following the month in which the last 

payment was due (in this case, January 1, 2010). Paragraph 2F 

unambiguously stated that:

If prior to the Modification Effective Date, 

(i) the Servicer does not provide me a fully 

executed copy of this Plan and the 

Modification Agreement; (ii) I have not made 

the Trial Period payments required under 

Section 2 of this Plan; or (iii) the 

Servicer determines that my representations 

in Section 1 are no longer true and correct, 

the Loan Documents will not be modified and 

this Plan will terminate. 

[(Emphasis added).]

Paragraph 2G further put plaintiffs on notice that the TPP 

itself was not a loan modification and their failure to strictly 

comply with the terms of the TPP would result in denial of a 

loan modification:

I understand that the Plan is not a 

modification of the Loan Documents and that 

the Loan Documents will not be modified 

unless and until (i) I meet all of the 

conditions required for modification, (ii) I 

receive a fully executed copy of a 

Modification Agreement, and (iii) the 

Modification Effective Date has passed. I 

further understand and agree that the 

Servicer will not be obligated or bound to 

make any modification of the Loan Documents 

if I fail to meet any one of the 

requirements under this Plan.
9 A-4599-12T1

[(Emphasis added).] 

Based on our reading of the TPP Agreement, we conclude that 

it was "a unilateral offer," pursuant to which the bank promised 

to give plaintiffs a loan modification, if and only if

plaintiffs complied fully and timely with their obligations 

under the TPP, including making all payments timely and 

providing documentation establishing that the financial 

representations they made to the bank in applying for the TPP 

were accurate when made and continued to be accurate. See

Wigod, supra, 673 F.3d at 562; Young, supra, 717 F.3d at 234. 

Thus, plaintiffs were required to demonstrate that, despite 

their inability to make their regular mortgage payments, they 

were at least financially reliable enough to make timely 

payments in the reduced amount stated in the TPP Agreement. 

And, they were required to document the representations they had 

made to the bank, showing that they had the other necessary 

qualifications for a modified loan.5 

 

5 As Wigod noted, in 2009, the HAMP program allowed servicers to 

extend TPP agreements without initially verifying the 

applicants' representations as to their financial circumstances. 

The verification would then take place during the trial period. 

Wigod, supra, 673 F.3d at 557. In 2010, the program was 

modified to require the servicers to verify the applicants' 

financial qualifications before giving them a TPP agreement. 

Id. at 557 n.2. 
10 A-4599-12T1

The summary judgment record clearly establishes that 

plaintiffs failed to comply with the payment schedule set forth 

in paragraph 2 of the TPP Agreement. The bank's account records 

show that instead of making three $1860 payments by the first of 

the month in October, November and December 2009, plaintiffs 

made a payment of $1860 payment on October 15, 2009, and a $930 

payment on November 17, 2009. They paid nothing in December. 

Thus, they almost immediately breached the terms of the TPP 

Agreement by failing to make either timely or sufficient 

payments. Indeed, for the three month period alone, their 

payments were short by $2790. They failed to make any payment 

in January. Assuming the trial period continued in January, 

they were required to pay another $1860 on January 1, 2010, 

making a total of $4650 then due and owing.

On January 20, 2010, the bank sent Arias a letter informing 

him that the bank had not received all of the required TPP 

payments, and had not received certain required financial 

documentation. The letter gave him until thirty days from the 

date of the letter or January 31, 2010 "whichever is later," to 

make the required payments and submit the missing documents, 

failing which he would "not receive a Home Affordable 

Modification." 
11 A-4599-12T1

Thus, arguably, the letter extended the trial period to 

February 20, 2010. The bank's records show that on February 16,

2010, plaintiffs submitted a payment of $3720, which was not 

even equivalent to what they owed as of January 1, 2010. 

Indeed, by February 1, plaintiffs owed yet another $1860, 

bringing the total they owed to $6510. 

On April 27, 2010, the bank sent Arias a letter notifying 

him that his loan was "not eligible for a Home Affordable 

Modification" because he "did not make all of the required Trial 

Period Plan payments by the end of the trial period." Even 

assuming that the TPP had been extended to February 20, 2010, 

the April 27, 2010 notice was entirely correct. Plaintiffs had 

engaged in a pattern of non-payment and inadequate payment which 

constituted a breach of the TPP Agreement and justified the bank 

in refusing to give them a loan modification.6 On these facts, 

we find neither a breach of contract nor a breach of the duty of 

good faith and fair dealing. The duty of good faith and fair 

dealing "does not 'alter the terms of a written agreement.'" 

 

6 We are unimpressed with plaintiffs' reliance on unpublished 

opinions involving debtors who faithfully made their TPP 

payments but were denied a loan modification. Plaintiffs 

attempt to gloss over their breach of the Agreement, contending 

that they made payments after receiving the April 27 letter 

denying them a loan modification. However, even after being 

denied a loan modification, they had a continuing obligation to 

pay the mortgage and the bank had a right to accept those 

payments. 
12 A-4599-12T1

Glenfed Fin. Corp. v. Penick Corp., 276 N.J. Super. 163, 175 

(App. Div. 1994) (citation omitted), certif. denied, 139 N.J.

442 (1995). Consequently, we affirm the order on appeal.

Affirmed.