The U.S. Seventh Circuit Court of Appeals ruled that Chicago homeowner Lori Wigod could sue Wells Fargo for breach of contract and fraud after the lender refused to permanently modify her mortgage terms. The ruling sets a precedent for cases where individual homeowners sued mortgage servicers. Chicago attorney Michael van Zalingen told WBEZ that lawsuits could be a bigger financial hit on banks than the $25 billion robo-signing settlement lenders, including Wells Fargo, reached with state attorneys and the federal government last month.

Wigod had applied for a mortgage modification on her North Side home in 2009 under the federal Home Affordable Modification Program. Wigod claims Wells Fargo had promised her that they would make the loan permanent, but then didn't, even though Wigod made her payments on time.