What is Constructive Contract / Promissory Estoppel?

Constructive Contract/Promissory Estoppel

This defense is often used when a lender attempts to foreclose on your home while you are making payments pursuant to a trial or permanent loan modification agreement. As many homeowners who have tried to obtain a loan modification know, the loan modification process is often confusing and poorly managed. You may be offered a trial modification over the phone, begin making payments, and never receive the actual documents that memorialize the trial modification.

The same thing often happens for borrowers who have been offered a permanent loan modification. Another common occurrence is being kept in a perpetual trial modification. A typical trial modification is supposed to last three months. If you have been in a trial modification for a longer period of time, you may be able to claim that the bank's failure to convert you to a permanent loan modification is a breach of your agreements with the bank.

Trial loan modifications do not typically guarantee that you will receive a permanent loan modification. They do not permanently change the terms of your loan. However, a bank's actions and the statements of its employees can potentially change this. For example, if you have been making trial loan modification payments for 18 months, and the bank's employees keep assuring you that your permanent modification is "coming soon," you may be able to claim that a contract exists between you and the bank.

Courts in Illinois have even found that if your trial loan modification documents say that you will be issued a permanent modification so long as you satisfy certain conditions, then it is a binding contract that the bank must follow. For example, many trial modification packages state that if you make your payments on time, and if your financial status does not change during the trial period, then the bank will issue you a permanent modification. Although banks have attempted to add disclaimers to this language, these promises are now binding.

Even if you do not have a written agreement, an oral agreement may be sufficient to modify your loan. If you relied on the bank's statements and fully performed your obligations, a contract exists by operation of law. This is what is known as a constructive contract or promissory estoppel. If you believe that this issue applies to your case, inform your attorney so that he or she can evaluate the issue.

Contact Us Today!

Talk to the leading law firm in the country about your rights for free! Fill out the form below or give us a call at (312) 313-1613 and we would be happy to give you the answers you need to make informed decisions for yourself and your family.

*First Name
Please enter your first name.
*Last Name
Please enter your last name.
*Phone
Please enter your phone number.

This isn't a valid phone number.
*Email
Please enter your email address.

This isn't a valid email address.
*I am...
Please make a selection.
*Are you a new client?
Please make a selection.
*How can we help you?
Please enter a message.
- By submitting your information or contacting Sulaiman Law Group, Ltd., and/or Atlas Consumer Law ("the firms"), you consent to receive automated communications, including autodialed calls, pre-recorded messages, texts, and emails from the firms, their agents, assignees, affiliates, or any affiliated parties. This consent applies to all contact details you provide, as well as to future communication technologies. Using the internet or other methods to communicate with the firms does not establish an attorney-client relationship; therefore, avoid sharing confidential information through these channels. Please note that all calls may be recorded for quality assurance and training purposes. To opt-out of communications, reply with "STOP" to any text message, click the "unsubscribe" link in any email, or send a written request to the firm's mailing address. Your continued interaction with the firms signifies your acceptance of these terms. You agree to indemnify the firms against any claims arising from the use of these communication methods. The firms are not liable for any communication failures. Disputes arising under this agreement are governed by Illinois law, with jurisdiction exclusively in the courts of DuPage County, Illinois, or the nearest federal district court. These terms are subject to change, and your continued communication with the firms implies your agreement to any such changes. If any part of this agreement is found invalid, the remaining sections will remain effective. This agreement is in compliance with the Telephone Consumer Protection Act (TCPA) and applicable state laws.
  Please read and agree to disclaimer.