Allen arose out of a home mortgage that the Allens received from Citi in January 2004. In April 2007, the Allens refinanced their mortgage with Citi. Beginning in late 2008, the Allens began struggling to make their mortgage payments. In May, 2009, the Allens contacted Citi to initiate the process for obtaining a modification of their mortgage under the Home Affordable Modification Program (“HAMP”). HAMP is a program, which permits at-risk borrowers to receive lower mortgage payments based upon their ability to pay. Though HAMP is optional for non-government sponsored entities, such as Citi, Citi opted to participate in HAMP. Therefore, Citi was bound to adhere to the rules and regulations set forth in HAMP.

HAMP loan modification occurs in a two (2)-step process. First, the mortgage servicer determines whether the borrower is eligible to participate in HAMP. During this determination, the lender may permit the borrower to enroll in a three (3)-month trial period. The second step is to reduce the borrower’s mortgage payment for a five (5)-year period.

The Allens successfully enrolled in the three (3)-month trial period for HAMP. The Allens, however, subsequently received a letter from Citi, which stated that their enrollment had been cancelled. The Allens contend that when they contacted Citi, Citi informed them to disregard the letter. The Allens began making the lower mortgage payments in September 2009, and continued through December 2009. On December 28, 2009, the Allens received a letter indicating that their account was delinquent, which Citi reported to the Allens’ credit agencies. The Allens then received another letter, which stated that they were not approved for HAMP and their loan modification application had been denied.

The Allens filed this suit and asserted breach of contract, among other causes of action. Citi moved to dismiss the breach of contract action on the grounds that HAMP did not create an independent cause of action. The Court denied Citi’s Motion to Dismiss.

The Court denied Citi’s Motion to Dismiss because it found that the Allens plead a valid breach of contract claim. The Court agreed with Citi that HAMP did not create an independent statutory cause of action. The Court, however, found that a borrower was entitled to assert independent state law claims against a lender, even if those state law claims arose out of HAMP documents. The Court found that the initial agreement to reduce the Allens’ mortgage payment could have constituted a contract and, at this stage in the litigation, the Allens had pled properly a breach of contract claim. Therefore, the Court denied Citi’s Motion to Dismiss.