Lawsuits – Mortgage Modification

A mortgage loan consists of an amount of money which is borrowed to purchase property and then repaid over a period of time (typically 15 or 30 years). The full amount or principal is repaid along with interest according to the payment structure of the loan.

Mortgage modification alters the original terms of a mortgage that were laid out in the initial loan contract between the lending institution and the homeowner. It is typically used when the borrower is having trouble making payments per the agreed terms. The modification can change the amount of the monthly payment and interest rate as well as other items outlined in the contract such as principle, loan term, late fees etc.

The lending institution is usually motivated to offer a mortgage modification when the borrower is experiencing financial issues. They would rather offer improved terms and a lower payment as this offers greater profits than if the property went into foreclosure.

If the government (federal or state) gets involved they may offer the lending institution incentives to participate. The Home Affordable Modification Program (HAMP) was introduced by the federal government during 2009 to help homeowners who were struggling with their mortgages. At the time there was approaching eight million homeowners in trouble. The program was designed to help homeowners by standardizing mortgage modification with the goal of lower monthly mortgage payments. Up to 110 lending institutions joined this program.

Mortgage Modification Lawsuits

The result of this was that many homeowners applied for a mortgage adjustment via HAMP after it was introduced by the Obama administration. Homeowners were put on a three month trial by their mortgage service providers at the new lowered payments. Many homeowners took part in the trial only to be refused permanent modification on completion – many were given no reason as to why.

Because of this many people are showing up behind in their mortgage payments and have reduced credit scores after all the effort. The result is that some of the lending institutions are threatening these borrowers with foreclosure.

Many of these homeowners have joined together in a class action lawsuit against some of the countries top lending institutions including Bank of America mortgage modification, Chase, Wells Fargo and CitiMortgage. This shows that borrowers are non too happy with the way they have been treated since enrolling in HAMP. It is estimated that only a third of those who entered the trial were given permanent status.

Many of the lawsuits state that the lending institutions broke the trial contracts by not giving permanent status to those that successfully completed the trial. The lenders state that the trials were never contracts and they used their discretion in choosing permanent partners.

It is also stated that the lenders contracts with HAMP and the Treasury were in breach for not offering permanent modification to those completing the trial. The judges involved have stated that homeowners should not be part of this because it is between the lenders and the government. The legal advisers to the homeowners do not agree with this – and the lenders broke the contracts with the homeowners.

These lawsuits could affect 620,000 involved in trial modifications. They state that the lenders benefited not providing permanent modification by defaulting the loans so they could make increased profits via late fees and financial charges. It is charged that the lenders ignored letters and requests and hindered inquiries when homeowners tried to contact them. All this after receiving billions from the government. Many borrowers were left in a worse state than prior to the modification. Many could not seek additional solutions to the problem and were faced with foreclosure.

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This entry was posted on Tuesday, May 14th, 2013 at 1:12 am and is filed under Mortgage Modification. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

10 Responses to “Lawsuits – Mortgage Modification”

  1. Danilo Liriano Says:

    i was in a 3 month trial and i was denied

  2. donna Says:

    I tried and tried to get wells fargo and 5th 3rd bank (2nd mortgage) to work with me but both refused. I had to do a short sale on a $205,000 house which was sold for $49,000. How does that make any sense??? Matter of fact 5th 3rd bank refused to work with me at all and I am still paying back this for the next 25 yrs of my life!!! Can I participate in this class action suit.

  3. Al Hubbard Says:

    We were in ‘trial” for 3 years never missing a payment,all while sending 11 packets to different branches across the USA…..still NOTHING!! How do I join the lawsuit??

  4. Jan Says:

    BOA does not want people who are current. Had to not pay my mortgage, apply for Illinois Hardest Hit, lady went on vacation, paperwork in some sort of fairy land, now my home of 14 years is in Short-Sale. Even that is a joke. 3 months later and all they do is keep asking for the same thing over and over and over and over. Seems like they want it to go through foreclosure instead. OH…AND THERE’S A BUYER! NO RUSH FOR BOA! THEY DON’T CARE ABOUT ANYONE LOSING THEIR HOMES!

  5. Nancy Shearer Says:

    I was accepted for a modification and a year later Bank of America reversed it out and said I owed the difference between my original payment and the modification amount. I had never missed a payment on the home I owned since 2002. I should have just paid it then but instead since they were at fault I tried to fight it. That was 2 years ago and I’m still struggling to keep my home. I have had to hire a lawyer. This is criminal.

  6. maudine a allen Says:

    I applied for a loan modification thru my lender Bank of America. it took them 2/one half years, had atrial period for 3 months ,and my payments was more than it was before I applied so as my interest rate.

  7. phillip Anderson Says:

    jp morgan chase I paid my mortgage fin till I ask chase for a modification sent a lot of money on 3 month trials and never got a mod but got for closed and lost my home on lies from chase bank

  8. phillip Anderson Says:

    I Was paying my mortgage loan fine till obama came up with this modification plane I ask chase they said to stop paying them thin would get a mod I sent a lot of money on 3 month trials that did no good I lost my home because of lies from chase I would have been fine if I would have never heard of this mod the banks won on that one thanks to obama

  9. Stoney Anderson II Says:

    I have done several modification programs with CitiMortgage. I’m on the verge of losing my home with almost four payments behind starting September 1st. I was on disability in 2005 and I am appealing the decision of the judge of November 14th for denying my disability

  10. Stoney Anderson II Says:

    continuing from last statement.my pillow will take 6 to 18 months from the date that my lawyer sent in my appeal in December 25th.I have no income and I’m in the verge of going into foreclosure because of my disability. I have a family of six with two grand babies if you could please help me to understand what is going on with this lawsuit my phone number is 9 3 1 623 0111 thank you for your time and have a blessed day.please contact me immediately I do not want know what to dothank you sincerely stoney anderson the second

 

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