How To Make A Bank Do The Right Thing

Lawsuit Forces Bank to Treat its Borrowers Fairly

The Challenge

Help clients defend their home after their Bank unilaterally altered the terms of their mortgage and threatened to begin foreclosure proceedings based on the new terms the clients never agreed to.

The Solution

We worked with the clients to gather irrefutable proof of the Bank’s willful and illegal actions and brought several claims that highlighted this blatantly wrongful conduct.

The Result

Clients received a large six-figure settlement, had the remaining balance of their mortgage cleared, and restored their credit score within weeks of filing claims.

In 2005, Cary and Mark* bought a home in Durham, North Carolina. For eight years, Cary and Mark made their monthly mortgage payments and remained in good standing with their lender, “Bank”. Cary and Mark entered into a loan modification agreement with Bank in January of 2013. The modification agreement increased the principal balance of the loan, set the interest rate to 4%, and established a monthly mortgage payment of $804.91. Cary and Mark made their agreed-upon monthly mortgage payment for six months and complied with all of the terms of the modified loan agreement.


In July of 2013, the Bank unilaterally altered the terms of Cary and Mark’s mortgage, increasing their interest rate to 9.5% and increasing the monthly mortgage payment to over $1,100. On top of this change, the Bank retroactively applied the new mortgage payment and interest rate to the previous 36 months. This alteration meant Cary and Mark’s mortgage payments for the last three years were deficient by $300 per month. A few days after making this change, the Bank sent a notice that Cary and Mark were in default by nearly $50,000 and that the Bank intended to accelerate the loan, or call in the total balance of the loan, if Cary and Mark failed to cure the loan’s deficiencies.


When Cary and Mark received this notice, they immediately called the Bank to determine how this discrepancy occurred. At first, the customer service representatives at the Bank believed a computer error caused the change to Cary and Mark’s account and these representatives assured Cary and Mark they would quickly resolve the issue. These representatives claimed they recorded the issue and left detailed notes about how the Bank could solve the problem. However, despite these assurances, the Bank continued with acceleration, threatened foreclosure, and later representatives claimed Cary and Mark’s account did not contain notes from previous interactions with customer service.


The Bank soon escalated its treatment of Cary and Mark’s “defaulted” loan, officially moving their loan into loss mitigation, which is essentially debt collection proceedings and threatening to initiate foreclosure. Between July and December of 2013, the bank called Cary and Mark 24 times to collect the $50,000 “deficiency.” The Bank made these calls at all hours of the day, including during work hours, and even made some calls to Cary’s workplace. In addition to calls, the Bank sent letters, notices, and Bank representatives to Cary and Mark’s home to collect the debt. Eventually, the Bank reported to all three credit agencies that Cary and Mark were more than 90 days late on their mortgage and their credit score took a major hit. Despite discussing this issue with dozens of representatives, including upper-level managers that recognized there had been some sort of mistake, the Bank continually refused to revert the terms to match the loan modification agreement.


Several Bank representatives calling to collect the debt stated it appeared Cary and Mark were issued a provisional modification of the loan terms, but the Bank had later decided to rescind the new terms. Each time the Bank contacted them, Cary and Mark would explain they were not behind on their mortgage, the terms of the loan the Bank was enforcing were not correct, and they would not pay any more than the agreed-upon $804 monthly payment. Cary and Mark stood their ground with every new debt collection action, repeatedly supplying irrefutable proof that they had modified their loan and that the Bank had acted illegally in altering the terms. In addition to the notarized, publicly filed, and signed loan agreement to modify the terms of the loan, Cary and Mark provided months of mortgage statements sent from the Bank that contained the correct terms of the loan and demonstrated Cary and Mark were up to date on all payments. Cary and Mark continually stood their ground, refused to cave to the Bank’s pressure, and sought out the JC White Law Group for representation in August of 2013.



In December of 2013, the Bank inexplicably sent a letter that it would write down the principal balance of the loan by nearly $80,000 if Cary and Mark agreed to set the interest rate to 9.5% and release the Bank from any possible claims under the previous agreement. The combination of the increased interest rate from 4% to 9.5% and decreased principal by $80,000 essentially would have returned the status of the loan to the modified terms agreed to in January of 2013. The very next day, the Bank transferred servicing of the loan to LoansRus. Though the Bank was no longer involved in collecting the debt, LoansRus was aware of the Bank’s bad actions and continued to mischaracterize the terms of the loan for the next six months. LoansRus sent six mortgage statements with the incorrect amount of principal, interest, and outstanding balance, all of which were based on the illegal terms the Bank instituted unilaterally. Cary and Mark believe the Bank finally realized it would face serious liability for its actions and attempted to backtrack its illegal conduct, trick Cary and Mark into waiving future claims, and shift the problem to LoansRus.

It is likely that many other borrowers suffered similar violations from banks because of underfunded and ill-equipped loan modification departments.
- Jim White

The Legal Claims

Jim White brought nine claims on behalf of Cary and Mark to highlight the extent of the Bank and LoansRus’ willfully illegal behavior. These claims included declaratory judgment regarding the terms of the loan, breach of contract, negligence, indemnification, usury, violation of the implied covenant of good faith and fair dealing, unfair and deceptive trade practices, and unfair debt collection. The heart of these claims sought to establish the true terms of Cary and Mark’s mortgage, remediate the financial and emotional strain the illegal behavior caused, and punish the Bank and LoansRus for their predatory lending practices.

The JC White Law Group sought declaratory judgment to reestablish the proper terms of the loan. Declaratory judgment is a legal remedy where a court will declare the legal rights between two parties on a specific matter. Cary and Mark attempted to resolve the Bank’s “mistake” with representatives from the Bank and LoansRus for months. However, it became clear that neither the Bank nor LoansRus had any interest in fixing their errors, and Cary and Mark were forced to legal action to enforce the terms of the contract the parties already agreed to.

Cary and Mark also brought breach of contract, negligence, and indemnification claims against both the Bank and LoansRus to directly compensate them for the harm caused by the illegal treatment of their mortgage. Cary and Mark experienced emotional and financial hardship directly caused by the lenders’ illegal actions. Not only was their credit score significantly harmed, but debt collectors also harassed and threatened Cary and Mark on a regular basis. All of this conduct significantly harmed Cary and Mark, and the goal of breach of contract, negligence, and indemnification claims was to compensate Cary and Mark for this suffering.

Cary and Mark brought claims against both the Bank and LoansRus for usury, violation of the implied covenant of good faith and fair dealing, unfair and deceptive trade practices, and unfair debt collection to punish the lenders’ predatory lending practices. North Carolina, like many states, has prolific laws to prevent lenders from engaging in predatory acts. These laws contain strong punishments for lenders that violate the law’s protections for consumers. Usury claims arise when a lender unilaterally increases the interest rate on a mortgage beyond the legal limit set by statute, which in North Carolina is 8%, without the other party’s contractual consent. Under North Carolina law, the implied covenant of good faith exists in every contract and forces parties to engage each other with honest and sincere intentions. Finally, North Carolina also provides plaintiffs a claim when companies engage in unfair or deceptive business practices. This act was designed to prevent all business actors from engaging in conduct that violates other laws or is considered deceptive.


The Bank and LoansRus violated usury, the covenant of good faith, and unfair business practices laws by increasing the interest rate of their mortgage a percent and a half above the legal limit, failing to work with Cary and Mark to resolve the dispute in good faith, and willfully engaging in fraudulent business practices. The Bank increased Cary and Mark’s mortgage interest without the consent of Cary and Mark to 9.5%, which is 1.5% above the legal limit in North Carolina. The Bank and LoansRus also violated both the implied covenant of good faith and the unfair and deceptive trade practices statutes when it attempted to steamroll Cary and Mark into loan terms the parties never agreed to, tried to trick Cary and Mark into releasing the Bank from future claims, attempted to cover up the Bank’s mistake, and repeatedly reported false information regarding the status of their mortgage.



Similarly, North Carolina’s Unfair Debt Collection Act prescribes limits on how lenders can collect debts to ensure predatory lending practices do not occur. A key feature of this state law is that the original lender can be considered a debt collector if it engages in debt collection practices. This law prohibits debt collectors from falsely representing information, contacting debtors in a harassing manner, unreasonably publishing debt collection information, and using unreasonable tactics to obtain repayment of debts. Debt collectors are prevented from mischaracterizing the extent of the debt, the status of the debt, the interest on the debt, the necessary payments to return the loan to good standing, or the amount of each payment for the debt. Debt collectors also cannot engage in conduct that naturally harasses or oppresses the debtor. This conduct could occur by calling an overbearing amount of times or calling a debtor at their workplace. Each violation of the statute is punishable with fines between $500-$4,000.


The Bank violated the Unfair Debt Collection Act 143 times, and LoansRus violated the law 12 times. These violations include falsely reporting the extent of the debt, the amount of each mortgage payment, the penalties for late payments, and attempting to collect interest in excess of the contractual rate. Debt collectors called Cary and Mark relentlessly and inappropriately, including at Cary’s workplace. Cary and Mark repeatedly provided the Bank and LoansRus all the necessary documentation to prove the terms of the loan were incorrect. Instead of fixing their error, these lenders chose to continue engaging in illegal and fraudulent activity. This demonstrates the Bank and LoansRus’ willful choice to fraudulently mischaracterize the terms of the loan, illegally threaten to accelerate and foreclose on the loan, and engage in harassing debt collection practices. In the end, Cary and Mark presented irrefutable documentation of nearly all 155 violations of the Unfair Debt Collection Act in their complaint. With the risk of a $4,000 penalty for all 155 violations, the Bank and LoansRus quickly settled the matter with Cary and Mark without going to trial.

The Case

Despite a continued failure to work with Cary and Mark to resolve the disputed loan terms, once Cary and Mark’s claims were filed, the lenders acted extremely quickly to resolve the dispute. In fact, they did not even file a response to Cary and Mark’s lawsuit. Instead, the Bank and LoansRus offered to meet any terms Cary and Mark presented in order to settle quickly. In the end, the Bank and LoansRus agreed to write off the complete balance of the loan, pay Cary and Mark a six-figure settlement for the rest of their claims, and return Cary and Mark’s credit report to its original status in exchange for dropping the suit. After dealing with the repercussions of the Bank’s actions for over a year, this settlement offer gave Cary and Mark a chance to resolve this issue quickly, without the hassle and expense of a trial.


Cary and Mark were successful in fighting against the Bank and LoansRus’ bad acts because they sought out legal representation early and kept detailed records of the lenders’ actions. Just a month after the Bank changed the terms of the loan, Cary and Mark came to the JC White Law Group to discuss their potential avenues of legal recourse against the Bank. Meeting with legal representation early reassured Cary and Mark that they were acting within their legal rights and the Bank was not. This information empowered Cary and Mark to stand up to the Bank and LoansRus for over a year. The JC White Law Group also told Cary and Mark to keep detailed records of their interactions with the Bank and LoansRus, including recording conversations with debt collectors and documenting how often Cary and Mark were contacted by the Bank and LoansRus’ agents. These records were irrefutable proof that the Bank and LoansRus were violating multiple laws and became the backbone of Cary and Mark’s claims. Without these records, it would have been more legally complex to prove the lenders’ bad actions and the Bank and LoansRus may not have settled so quickly.


Though Cary and Mark’s claims were never reviewed by a judge or jury, the Bank and LoansRus’ quick response in settling demonstrates just how strong their case against these bad actors was. As soon as the Bank became aware that Cary and Mark were represented by legal counsel, the Bank and LoansRus eagerly began asking if they intended to file a suit. When Cary and Mark demonstrated they were going to fight the Bank’s bad actions with legal recourse, the Bank quickly took measures to reconcile and settle the matter without going to trial. Though Cary and Mark did receive extremely lucrative financial compensation from the settlement, the Bank and LoansRus’ wanton, predatory, deceptive, and illegal actions could have resulted in a jury verdict upwards of three-quarters of a million dollars. Additionally, the Bank’s bad actions could have led to regulatory issues for the Bank. Financial institutions are regulated by government entities and certain bad actions trigger reporting requirements or other regulatory issues. If Cary and Mark’s claims had moved further in the judicial process, the Bank and LoansRus may have been forced to spend time and resources complying with regulatory mandates.

The Impact

Beyond justice for Cary and Mark, this case highlighted huge gaps in financial institutions’ processing of loan modification agreements, changed the Bank’s behavior for the better, and demonstrated how small violations of consumers’ rights can cumulatively lead to huge liability for lenders. Cary and Mark were not the only victims of the lenders’ widespread violation of consumers’ rights. “It is likely that many other borrowers suffered similar violations from banks because of underfunded and ill-equipped loan modification departments,” says White. Throughout Cary and Mark’s case, it became clear the entire issue was one large mistake that was then covered up. If the Bank had properly trained its employees and dedicated the necessary resources to resolve the problem, they likely would have saved themselves hundreds of thousands of dollars in settlements with consumers like Cary and Mark.


After this case, the Bank may have changed its practices to better address the issues that led to Cary and Mark’s harm. The number of settlements against the Bank has significantly dropped since Cary and Mark’s case, and the JC White Law Group believes this could be due to plaintiffs like Cary and Mark highlighting the dire need to provide the necessary resources to the loan modification department. Finally, this case also demonstrates how small violations of consumer rights can build on each other and lead to great liability for financial lenders. Though admitting fault is not second nature to financial institutions, working with their consumers to fix problems before the violations compound on each other will save these actors millions of dollars.

* Names have been changed to protect confidentiality, but the results are real.

Case studies do not represent this law firm’s or our lawyers’ entire records. Each case is unique and factors outside the control of attorneys and clients can produce very different results .   This case study is not intended as a guarantee that the same or similar results can be obtained in every matter and you should not assume that a similar result can be obtained for you.

This post was co-written with Mallory Miller, JD.

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