by Mary Ellen Podmolik – The Home Front
July 15, 2011
Federal judges in Chicago and Boston have issued rulings in the past three weeks that keep alive two long-running lawsuits brought by homeowners, including two suburban Chicago residents, who have suffered as a result of the housing crisis.
The rulings do not mean a resolution of either case is near, but the final outcome of both cases could affect hundreds of thousands of homeowners, so they bear watching. That’s because the next step in the process is to try to get the cases certified as class-action suits.
The first ruling, handed down by a federal judge in Boston, allows a case to move forward that addresses a major complaint regarding loan servicers’ implementation of the federal Home Affordable Modification Program, namely that some homeowners who faithfully make their trial payments were nevertheless denied permanent loan modifications.
According to the Treasury Department’s most recent report of the program, of the almost 1.6 million trial modifications begun since HAMP started in April 2009, only 608,615, or 38 percent, have resulted in permanent mortgage modifications.
The U.S. District Court case consolidated 26 individual cases in 19 states that were brought by homeowners who allege that Bank of America broke “a binding contract” tied to the loan modifications.
The lender tried and failed to have the entire case, which includes Oak Lawn homeowner Deborah Brozak as one of the plaintiffs, dismissed, although Bank of America was successful in having some of the claims dismissed.
According to the suit, all 46 homeowner-plaintiffs had their mortgages with Bank of America and started trial HAMP mortgage modification plans with the servicer. The homeowners said despite fulfilling all the provisions that were necessary to have their lowered payments made permanent, Bank of America either failed to grant them permanent modifications or did not provide them with a written response as to why they were being denied.
Brozak, for example, made six trial payments to Bank of America in 2010 until September, when Bank of America stopped accepting her payments, and the servicer a month later initiated foreclosure proceedings against her, according to her suit, filed in October 2010 in Chicago.
The homeowners’ suit proposes two classes of plaintiffs: Those who didn’t receive temporary modifications and those who were not given permanent HAMP modifications.
The other suit, brought by homeowners against JPMorgan Chase, argues that the lender unfairly froze or reduced customers’ home equity lines of credit as the housing crisis sent home values spiraling downward.
The lawsuit, filed in December 2009 by Evanston resident Shannon Hackett and then consolidated in federal court in Chicago with similar lawsuits in other states, challenges the decision by lenders to freeze home equity lines starting in 2008 as the value of homes securing the loans began dropping. National City Bank, now part of PNC Financial, offered some customers $200 cash if they would voluntarily cancel their credit lines.
Hackett had held a $100,000 home equity line for five years with Chase when she received notice in November 2009 that the line had been frozen and she could make no additional draws against it, according to the suit. Chase said her home, valued at $445,000 at the time of the line was taken out, had dropped in value to $358,000 based on “an industry standard method,” and that sum no longer supported the full credit line.
She appealed Chase’s decision and paid $385 for an appraisal that pegged the value of her home at $400,000. According to her complaint, the decline wasn’t significant enough to enable Chase to employ provisions of lending rules that would allow it to suspend the credit line.
JPMorgan Chase sought to have the consolidated case dismissed, saying among other things that federal law and contractual provisions give it the right to cut home equity lines.
U.S. District Judge Rebecca Pallmeyer dismissed certain portions of the case that alleged fraudulent practices. But she also said the homeowners’ allegations that Chase “reduced or suspended their (home equity lines) without adequate justification are sufficient to state claims” for breach of contract in some states, and the unfair conduct claims survive under state laws in, among other places, Illinois.
Efforts to reach Brozak and Hackett were unsuccessful.
July 7, 2011
Judge upholds lawsuit against Bank of America over failed mortgage modifications.
Reuters (7/6, Stempel) reported a Boston judge rejected Bank of America’s motion to dismiss a lawsuit against it from 46 homeowners claiming it went bank on agreements to assist them with mortgage modifications. District Judge Rya Zobel said the complaint from plaintiffs who tried to participate in the Federal Home Affordable Modification Program established their observance of HAMP requirements and said Bank of America “willfully failed” to do its part. Zobel rejected other plaintiff claims and a request to prevent the bank from foreclosing on 37 homes while the lawsuit is in play.
Bloomberg News (7/7, McLaughlin) reports, “The complaint consolidates 26 cases originating in 19 states that were transferred to federal court in Boston, according to Zobel’s decision.” The homeowners, who sought loan modifications from Bank of America under the federal government’s Home Affordable Modification Program, allege “BOA’s general practice and culture is to string homeowners along with no intention of providing actual and permanent modifications.” However, Zobel dismissed claims from “homeowners with loans serviced by Bank of America who didn’t get temporary modifications,” saying they lacked standing.
The Boston Globe (7/7, McKim) reports, “Boston attorney Gary Klein, lead council for the homeowners involved in the consolidated cases, said the decision would help prevent thousands of properties from being seized.”
We are continuing to review cases against Bank of America and other mortgage companies. If you feel you have a claim, please contact us for a free consultation.
December 2010
Mobile-Baldwin Consumer Law Firm files Mortgage related Class Action.
Mobile-Fairhope, AL – The Law Offices of Underwood & Riemer have filed a class action law suit in The United States District Court for the Southern District of Alabama, Southern Division on behalf of Kimberley George and all others similarly situated. The defendants in the case are Bank of America, NA and BAC Home Lending Services, L.P. BAC Home Lending Services, L.P. is a subsidiary of Bank of America. The claims rise from the servicing of a real estate mortgage loan secured by Ms. George for property located in Mobile County, Alabama.
The suit alleges that Bank of America wrongfully attempted to foreclose on Mrs. George’s home. Specifically, BOA failed to follow rules designed to allow homeowners to modify their loans and avoid foreclosure, according to the suit. The bank is alleged to have entered into to a “Trial Plan Agreement” under which it agreed not to foreclose and to extend a permanent modification upon George’s completion of the trial plan. She completed the plan, but Bank of America started foreclosure anyway.
“This case is similar to many we continue to see rising out of misrepresentations and poor practices by mortgage companies regarding the handling of Federal moneys passed to them under programs such as the “Homeowner Affordability and Modification Program” (“HAMP”).” Stated Kenneth J. Riemer, Partner, Underwood & Riemer. “When Bank of America accepted billions of dollars in taxpayer bail out funds, it agreed to follow these HAMP rules, which are designed to help struggling homeowners. Homeowners did not get a bailout. They got the HAMP program, which is only effective when mortgage companies like Bank of America comply with it. What we see in the George case and many others like it is a systematic refusal to follow these rules and a rush to foreclose when the homeowner has done everything to hold up their side of the HAMP.”
December 6, 2010
Contact: Earl P. Underwood – 251-990-5558 – epunderwood@alalaw.com
Kenneth J. Riemer – 877-432-9212 – kjr@alaconsumerlaw.com
Mobile-Baldwin Consumer Law Firm files Mortgage related Class Action.
Mobile-Fairhope, AL – The Law Offices of Underwood & Riemer have filed a class action law suit in The United States District Court for the Southern District of Alabama, Southern Division on behalf of Kimberley George and all others similarly situated. The defendants in the case are Bank of America, NA and BAC Home Lending Services, L.P. BAC Home Lending Services, L.P. is a subsidiary of Bank of America. The claims rise from the servicing of a real estate mortgage loan secured by Ms. George for property located in Mobile County, Alabama.
The suit alleges that Bank of America wrongfully attempted to foreclose on Mrs. George’s home. Specifically, BOA failed to follow rules designed to allow homeowners to modify their loans and avoid foreclosure, according to the suit. The bank is alleged to have entered into to a “Trial Plan Agreement” under which it agreed not to foreclose and to extend a permanent modification upon George’s completion of the trial plan. She completed the plan, but Bank of America started foreclosure anyway.
“This case is similar to many we continue to see rising out of misrepresentations and poor practices by mortgage companies regarding the handling of Federal moneys passed to them under programs such as the “Homeowner Affordability and Modification Program” (“HAMP”).” Stated Kenneth J. Riemer, Partner, Underwood & Riemer. “When Bank of America accepted billions of dollars in taxpayer bail out funds, it agreed to follow these HAMP rules, which are designed to help struggling homeowners. Homeowners did not get a bailout. They got the HAMP program, which is only effective when mortgage companies like Bank of America comply with it. What we see in the George case and many others like it is a systematic refusal to follow these rules and a rush to foreclose when the homeowner has done everything to hold up their side of the HAMP.”
The Underwood & Riemer firm has associated the National Consumer Law Center as co-counsel in the George case and expect the case to be consolidated with other similar cases file in other states.