It can. In a July 2025 case, the Appeals Court upheld a Housing Court ruling that a 2016 loan modification was a new, binding agreement that reinstated the homeowner’s loan, so HUD rules required a fresh notice of default before foreclosure. Because the servicer never sent one, the foreclosure did not count and the servicer lost its eviction case. This is an unpublished Appeals Court decision under Rule 23.0, which courts may cite as persuasive but not as binding precedent.
What happened
Two co-borrowers bought a home in Peabody in 2003, and one later transferred his interest to the other. After several earlier modifications, they signed a 2014 loan modification that everyone agreed reinstated the loan. They fell behind again, the servicer sent default notices in 2015, and it started foreclosure. While that foreclosure was pending, in November 2016, the homeowner and the servicer signed another modification. It looked much like the 2014 agreement but added two new paragraphs: one about attorney’s fees in disputes over the agreement, and one about how mortgage insurance terms might change. The homeowner stayed in default, the servicer did not send a new default notice, and it completed the foreclosure in 2019 and then filed an eviction case. The parties agreed to let the judge decide one legal question on the papers: did the 2016 modification require a new notice of default?
What the court decided
The Appeals Court affirmed the judgment for the homeowner in Nationstar Mortgage LLC v. Zeuli, No. 24-P-496 (Mass. App. Ct. July 2, 2025) (Rule 23.0 decision).
The HUD rule. Under 24 C.F.R. § 203.602, the mortgagee must give each borrower in default a notice by the end of the second month of a delinquency. If an account is reinstated and becomes delinquent again, the notice must be sent again, though not more often than once every six months.
The servicer’s argument. The servicer said the 2016 modification was essentially identical to the 2014 one. In its view, nothing new was given in exchange, so the 2016 document had no legal effect, did not reinstate the loan, and did not trigger a new notice.
Why it lost. A contract needs consideration, meaning either a benefit to the person making the promise or a detriment to the other side. See Miller v. Cotter, 448 Mass. 671 (2007). Consideration can be slight, as long as it has some value. The two new paragraphs were substantive. In one, the homeowner gave up seeking attorney’s fees in disputes over the agreement. The other recorded her understanding about mortgage insurance. Those changes were enough to make the 2016 modification a real, separate contract. Since the judge’s ruling that the contract reinstated the loan stood, the servicer needed to send a new default notice and did not.
What the court did not decide. The servicer also argued on appeal that it never actually reinstated the loan on its books. That was a factual argument it had not made in the trial court, and it contradicted the parties’ agreement to decide only a legal question. It was waived. The court also said it was not deciding whether every document called a loan modification reinstates a loan under the HUD rule. Neither side had argued what “reinstated” means in the regulation.
One side note: the Appeals Court agreed with the servicer that the trial judge was wrong to say the 2016 modification released the former co-borrower from the note. That error did not change the outcome.
What this means for you
If your mortgage is covered by HUD rules, every new default after a reinstatement can restart the lender’s notice duties. Here, the servicer signed a new modification while a foreclosure was pending and then finished that foreclosure without a new notice. That cost it the eviction case.
Small changes in the paperwork can matter. Here, two short paragraphs were enough to make the 2016 modification a new contract. Compare every modification you sign with the one before it, line by line.
Keep the limits in mind. This was an unpublished decision on an agreed legal question. A lender with evidence, or with a different argument about what “reinstated” means, might get a different result.
What to do now
- Keep a complete copy of every loan modification you have signed, with dates and signatures.
- Find out whether your loan is subject to HUD servicing rules. Your mortgage documents or servicer can tell you.
- After any modification, keep every notice you receive, and note whether a new default notice came before any foreclosure step.
- If you face an eviction after foreclosure, file an answer on time and raise notice defects as a defense.
- Think carefully before agreeing to decide your case on a limited set of issues, since arguments outside that agreement may be lost.
If this is your situation, call Doubleday Law at (617) 575-2006 or tell us what happened. Housing Court deadlines are short.
