Quite possibly the darkest cloud (among many) looming on the horizon for Bank of America (BOA) is the class action against it in the federal district court of Massachusetts by residents of fifteen states with BOA-serviced home loans. The basis for that lawsuit is what we refer to as the “false HAMP denial”, a common illegal tactic employed by all the Wall Street banks. The same sort of suit is likely to be eventually filed against those banks (erg: Chase, Wells Fargo, U.S. Bank, Citi Bank of New York) in the near future but for now, being the biggest and dumbest loan servicer, BOA got caught first.
The facts supporting the Massachusetts lawsuit are simple. BOA represented to the claimants that if they made three trial period payments, they would be given a permanent loan modification. Those homeowners proceeded to do as instructed by BOA and made the three payments. However, after doing so, BOA went back on its word and refused to give them a permanent modification. Without doubt, this is a practice employed many times over by BOA, so the eventual size of the class claiming damages could be enormous.
Just as this matter is getting oodles of attention in the press, in walks Delores to our office last week. I first visited with Delores several months ago, as she was well along in the foreclosure process. I laid out her options to contest the foreclosure, also telling her that it appeared that she qualified for HAMP mortgage relief. For those of you who don’t know, HAMP is a mortgage modification process which the banks which were the recipients of federal bailout money (which most were) are required under the law to offer qualifying homeowners. Should the homeowner qualify, the modification could dramatically lower his or her monthly mortgage payment through a reduced interest rate, an extended maturity date, or even a reduced principal loan balance. In short, qualification for a HAMP modification could easily make the difference between saving or losing one’s home.
Months went by since I last talked with Delores. As I found out last week when she came back in to see us, her bank, BOA, had taken a foreclosure judgment against her. However, in the middle of July, just a month ago, she reached a verbal agreement for a HAMP loan modification with BOA which required her to send in three monthly trial period payments of approximately $900 each, beginning on August 1st. Within days, Delores sent the first payment in, thinking her mortgage nightmare was finally over. Unfortunately it was not to be as BOA dipped right back into its bag of tricks, ordering that Delores’ home be put up for foreclosure sale at the very same time that it offered her the trial period plan!
By doing what it did to Delores, BOA clearly set itself up for failure. We will now pursue an even better loan modification for Delores, along with a claim for damages. And once again, BOA will find out that it shot itself in the foot. Like an old habit that’s hard to break, it seems that BOA cannot stop itself from continuing to defraud homeowners in pursuit of the almighty dollar. Will BOA ever learn?
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Kate Eyster and Lauren McGookey contributed to this article.
Copyright 2013 Daniel L. McGookey