Most people consider their home one of the most important things in their life. A house should be a secure place for people to relax in and to enjoy time with their families. In this economic downturn, home ownership has become a struggle for some. Many homes are “under water” and while most people try to pay their mortgage on time, they are finding it harder to do. Banks are not making things any easier.
Bank of America is facing a class action lawsuit that involves home mortgage adjustments under Obama’s Home Affordable Modification Program (HAMP). A federal court in Nashville will consider consolidation of more than a dozen cases. The complaints allege that Bank of America committed a breach of contract when they offered homeowners mortgage modifications under HAMP, but later denied permanent modification to those who had complied with all terms of the modification. Plaintiffs also allege that Bank of America threatened foreclosure to people who had been current before the modification and paid every modified payment on time.
Homeowners who had been current prior to a trial HAMP modification but were denied a permanent modification were subsequently considered in default. The servicing companies for the bank then began calling the homeowners and required that they pay the difference between the modified payments and the original payments for the HAMP trial period or they would face foreclosure. For some homeowners, such as one Washington couple, the difference was $8,000 or more.
Bank of America argues that there was no breach of contract. Bank of America claims that HAMP only requires that it consider borrowers for modification but that the bank has discretion when it comes to granting the permanent modification. While the Treasury Department confirms that the HAMP trial plans do not promise permanent modification, homeowner complaints state language in their individual contracts that promise permanent modification after a successful trial period.
Source: USAToday.com, “Home mortgage modification snags spark lawsuits,” Stephanie Armour 9/10/10