A federal judge today ruled that Bank of America (NYSE: BAC) must answer to tens of thousands of homeowners who say the banking giant improperly denied their home-loan modifications under the federal Home Affordable Loan Modification Program (HAMP), announced Hagens Berman.
In her ruling, Judge Rya Zobel denied Bank of America’s motion to dismiss the case, and clarified which homeowners could continue to pursue legal claims over the bank’s handling of $25 billion of taxpayer money designed to allow homeowners to avoid foreclosure.
Bank of America is obligated under HAMP to offer alternatives to foreclosure and permanently reduce mortgage payments for eligible borrowers struck by financial hardship but, according to the lawsuit, the bank has not lived up to its obligation.
“We have talked to hundreds of homeowners who have experienced the same bureaucratic nightmare in dealing with Bank of America,” said Steve Berman, managing partner of Hagens Berman. “The vast majority tell us the same thing: Bank of America claims to have lost their paperwork, failed to return phone calls, made false claims about the status of their loan and even taken actions toward foreclosure without informing homeowners of their options.”
In her ruling, Judge Zobel states that the complaint “meticulously details each plaintiff’s initial and ongoing compliance with all conditions” and adds “that is sufficient to defeat” Bank of America’s motion to dismiss.
Judge Zobel also ruled that plaintiffs living in California, Illinois, Arizona, Massachusetts, Oregon, Maryland, New Jersey, Pennsylvania and Wisconsin can pursue claims under their state laws, which often offers stronger consumer protections.
The judge’s decision comes on the heels of media reports that the federal government will stop payments to Bank of America under HAMP until it sees improvement in the handling of mortgage modifications.
The HAMP program allowed qualified borrowers to enter into Trial Period Plans (TPP), purportedly to help homeowners prevent foreclosure by offering the possibility of a permanent modification after a series of successful trial payments at a lower rate. According to the lawsuit, however, the bank denied a permanent modification to many homeowners, regardless whether they successfully made the trial payments on time.
The lawsuit originally sought to represent all homeowners whose mortgages were serviced by Bank of America. Judge Zobel ruled that only those who were accepted in a TPP but were not given permanent HAMP modifications or written notice that their application had been denied will be allowed to continue their claims.
“We are looking forward to proving that Bank of America intentionally postpones homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by taxpayer dollars financing TARP-funds and also collects higher fees and interest rates associated with stressed home loans,” Berman added.
The lawsuit asks the court to require Bank of America to provide permanent home mortgage modifications to qualified individuals, as well as to award damages to members of the class, which includes homeowners who entered into a TPP but were wrongly denied a modification.
About Hagens Berman
Seattle-based Hagens Berman Sobol Shapiro LLP represents whistleblowers, investors and consumers in complex and class-action litigation. The firm has offices in Boston, Chicago, Colorado Springs, Los Angeles, Phoenix, San Francisco and Washington, D.C. Founded in 1993, HBSS continues to successfully fight for investor rights in large, complex litigation. More about the law firm and its successes can be found at www.hbsslaw.com. Visit the firm’s class-action law blog at www.classactionlawtoday.com.
Contacts:
Mark Firmani, 206-443-9357
mark@firmani.com
