PHH Mortgage Corp. v. Barker

Denise and Robert Barker (defendants) executed a note and mortgage on a home with First Financial Bank, N.A. (First Financial). Thereafter, the Barkers failed to make the required monthly payments for two consecutive months. After attempting to contact First Financial to rectify the issue, Denise was eventually referred to the “loss mitigation” office that would assist the Barkers in curing the default and bring the mortgage current. A month later, the Barkers received a loss-mitigation packet from the “Mortgage Service Center” with information to complete and return. After the Barkers returned the completed packet they received a letter from First Financial notifying them that their mortgage was in default. Around the same time however, the Barkers received a new “coupon book” from First Financial that listed a new monthly payment. Believing that their mortgage had been reinstated, the Barkers began making monthly mortgage payments using the new coupon book. Thereafter, First Financial sent two checks and letters to the Barkers informing them that their money was being returned because their mortgage remained in default and was pending foreclosure. The Barkers later testified at trial that they never received any check or letter and no evidence was presented that the checks were ever cashed. PHH Mortgage Corporation (PHH) (plaintiff) then filed a complaint in foreclosure against the Barkers. However, Denise continued to make monthly mortgage payments and First Financial continued to accept them for nearly six months until told to cease by PHH. PHH filed a motion for summary judgment which was later denied by the trial court. Before the trial court ruled on the motion, the Barkers filed for bankruptcy and continued to receive “loss mitigation” paperwork from First Financial, which they completed and returned. The trial court held for the Barkers, reinstated their mortgage and note, and PHH appealed.