So back to the question; we have a binding agreement on the modification. Is the lender a holder entitled to enforce without this modification?
You state that "we have a binding agreement on the modification", but earlier said "I don't know if the modifcation was ever signed by the lender. BUT, the terms of the modfication were in place as the payment changed to reflect the modified payment." It seems to me that you present a possibly faulty legal conclusion.
Does the modification agreement call for the signature of both parties to give the agreement effect? This might take the form of express language, but also might simply be implied by the appearance of a place on the agreement for the Lender to sign.
You begin with the conclusion which might or might not be correct. In most states, as t points out, failure of one party to execute the agreement would be rather strong and conclusive evidence that a contract never came into being.
The assertion that acceptance of payments consistent with the modification agreement proves acceptance of the agreement is pretty weak at best, since a Lender can always elect to accept partial payments and can unilaterally choose forbearance without entering into a modification agreement at all.
Paragraph 12 of your deed of trust probably includes this language:
12. Borrower Not Released; Forbearance By Lender Not a Waiver. Extension of the time for payment or modification of amortization of the sums secured by this Security Instrument granted by Lender to Borrower or any Successor in Interest of Borrower shall not operate to release the liability of Borrower or any Successors in Interest of Borrower. Lender shall not be required to commence proceedings against any Successor in Interest of Borrower or to refuse to extend time for payment or otherwise modify amortization of the sums secured by this Security Instrument by reason of any demand made by the original Borrower or any Successors in Interest of Borrower. Any forbearance by Lender in exercising any right or remedy including, without limitation, Lender’s acceptance of payments from third persons, entities or Successors in Interest of Borrower or in amounts less than the amount then due, shall not be a waiver of or preclude the exercise of any right or remedy.
As t points out, most often the mortgage investor or servicer will seek to assert the terms of the modification, because the oppressive language is more favorable to the Lender. It is unclear what you hope to accomplish by asserting that the modifcation is valid and binding as this may make your case worse rather than better.
To any extent that you think that the argument that a foreclosure was wrongful because the Lender failed to follow the written modification agreement, if you do not even have a signed copy of the agreement, you seem to be describing exactly the situation t talked about. Moreover, the question as to wrongful foreclosure will turn on whether there was a default, not the amount of default. If you go into court and the creditor says you owed $10,000 at default and you say, "No, I did't owe a dime more than $8,000 when I defaulted", the judge is going to throw you out on your ear.
The only successful argument is probably going to be that you were never in default at all. Good luck!
As Plaintiff, can I just sit back and point out the inconsistencies between the Note the lender produced and let them try to explain it?
As plaintiff in any proceeding, you cannot just "sit back" and hope for anything. You will bear the burden of proof as to every essential element of your asserted cause of action. It is the defendant which can sit back and simply assail your arguments and your proof.
This is why it is so much harder to win as plainiff than to prevail as a defendant. This is also why it is always easier to defend in a non-judicial foreclosure state in a Bankruptcy setting rather than as plaintiff in a state or Federal court action for wrongful foreclosure.
Before I began to argue that there was a binding modification agreement, I would read the modifcation agreement about twenty times, look up all of the statutes and cases, show the modification agreement to a lawyer and ask yourself what you are trying to PROVE by the modifcation agreement. Most borrowers would usually be better off NOT putting the modification agreement into evidence, because much of the language is likely to eviscerate your case.