Nationstar Mortgage v. Curatolo (IN)

Summary: Trial court did not have authority to modify a mortgage agreement without the consent of both parties participating in a settlement conference if the parties do not agree to the modification.


Nationstar Mortgage, LLC v. Curatolo, 990 N.E.2d 491 (Ind. Ct. App. 2013).


Facts: In August 2006, Jeffery A. Curatolo (“Homeowner”) executed and delivered a promissory note and mortgage promising to pay $245,000 plus interest and granting a security interest in the mortgage property to Bancgroup Mortgage Corporation, which was later assigned to Nationstar Mortgage, LLC (“Nationstar”) in 2010. In September 2011, Nationstar filed a complaint alleging that the Homeowner was in default and sought to foreclose on the property. Instead of answering the complaint, the Homeowner requested a mortgage foreclosure settlement conference.

In January 2012, after numerous settlement conferences, an order indicated that Nationstar presented the Homeowner with a three-month foreclosure forbearance plan. The trial court ordered Nationstar to prepare a permanent modification plan after receipt of the Homeowner’s timely third payment. However, after the Homeowner completed the three-month plan, Nationstar requested additional financial documentation from the Homeowner because of alleged discrepancies in the Homeowner’s stated income. In a June 2012 hearing, the trial court found that Nationstar negotiated in bad faith and should be sanctioned because it had consistently raised additional issues in the negotiations despite the fact that the Homeowner made timely payments. The court also found that if the Homeowner made timely payments during the proscribed period of time the court had set and that if Nationstar failed to act in good faith, then the Court would establish a modification program for the parties.

In October 2012, the court issued a final order modifying the mortgage agreement by increasing the loan payment, shortening the term of years from thirty to fifteen, and lowering the interest rate to 3%.  Nationstar appealed because they did not consent to the terms.


Holding: Reversed and remanded. On appeal, Nationstar challenged the trial court’s authority to modify a mortgage agreement without the consent of both parties if they failed to agree to the terms of a foreclosure prevention agreement. The appellate court held that the trial court did not have that authority. The court reasoned that while the aim of Ind. Code § 32-30-10.1-1(a)(3) was to “modify the foreclosure process to encourage mortgage modification alternatives,” it did not make it mandatory on creditors and debtors to enter into foreclosure prevention agreements. The court stated that were it otherwise, the statute “would likely run afoul of the constitutional prohibition on the impairment of contractual obligations.”

The court also found that while Ind.Code § 32–30–10.5–8.5(b) gave the trial court the right to stay the foreclosure action during the negotiation process and the right to issue a provisional order requiring the Homeowner to continue making monthly payments while living in the home, the statute did not give the trial court authority to enter a final order modifying the mortgage agreement.

Finally, the court found that Nationstar had not negotiated in bad faith in requesting additional documentation because no final agreement had been reached. “[The Homeowner] was not entitled to a final foreclosure prevention agreement with terms to his liking,” the court stated.


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By: ATG Underwriting Department | Posted on: Mon, 02/10/2014 - 9:37am