Archive for the ‘Mortgage Related’ Category

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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Chase Mortage Modification Lawsuits

Chase Home Finance LLC and JPMorgan Chase, N.A. face a class action lawsuit because of suggested irregularities in their mortgage modification programs.  This was brought about by the U.S. District Court, in Southern District of California.

Mortgage holders who were having trouble making their monthly mortgage payments were able to have a trial run on Home Affordable Modification Program (HAMP) for three months and on successfully completing the trial make this permanent.

The lawsuit claims that mortgage holders were not offered permanent status after successfully completing the trial.  The borrowers were deprived by Chase of the opportunity to modify their mortgages.  Chase breached the contracts with their clients for their own monitory gain and was against the intentions of HAMP.

CitiMortgage Modification Lawsuit

CitiMortgage have a lawsuits brought about against them by homeowners stating that they did not reduce loan payments per promises made.  Many homeowners were left in a very bad financial situation as a result.

The class action came about because of the treasury’s Home Affordable Modification Program (HAMP) which was introduced to help owners facing financial problems.  Home owners were given a trial period of three months to make reduced payments.  If they managed to do this for the trial period then it would become official.

So many homeowners with CitiMortgage loans completed the trail following all instructions of the HAMP program.  But – they were not allowed access to the permanent program.  The result was that many of the homeowners were left in a financially bad way – and many were in a worse way than when they started.

The lawsuit against CitiMortgage states that they did not fulfill the HAMP agreements with their mortgage-holders and that it misrepresented the information of the program.  Its open to all homeowners who fulfilled the trial period of three months per agreement subsequent to April 13, 2009 and who were not allowed permanent entry into the program.

Mortgage Modification Lawsuit Against CitiMortgage

CitiMortgage are faced with a class action lawsuit filed by homeowners that alleges that the company did not fulfill their promise to provide mortgage borrowers reduced loan payments.  If fact the suit states that it also financially devastated the borrowers.

The lawsuit states that homeowners with a mortgage loan from CitiMortgage could us a trial mortgage modification program to help them reduce payments.  This program was built around the U.S. Treasury Department’s Home Affordable Modification Program (HAMP).  The program would become official if the homeowners lasted the three month trial period making the reduced payment amounts

Many homeowners completed the trial and followed all stipulations of the program – however they were denied access to the permanent program.  This made things very difficult for the homeowners and many were in a worse situation after they completed the trial.

The lawsuit claims that CitiMortgage did not honor its agreements with homeowners and that it misrepresented the information of the program.

The lawsuit is open to all persons in the US who are serviced by CitiMortgage and who complied with the conditions of the trial program and who did not receive permanent mortgage modification per the loan modification agreement.

More on Mortgage Modification Lawsuits

Chase Adjustable Rate Mortgage (ARM) Lawsuit

Individuals who obtained an adjustable rate mortgage (ARM) from Chase ( either JP Morgan Chase Bank or Chase Home Finance) before April 2006 are seeking compensation as part of a class action lawsuit.  This is happening only in California at the moment – though borrowers in other states can instigate legal action if Chase set their interest rate wrong.

The loan documents stated that the initial interest rate  would be the sum of a specified Index plus a set Margin or, a rate less than that sum.  The documents also stated  “Your interest rate will be based on the weekly average yield on United States Treasury securities adjusted to a constant maturity of 1 year (the ‘Index’) plus an amount called a ‘Margin.’”

Later in the document, the disclosures stated that “Your initial interest rate may be discounted and will not be tied to the Index.”   Thus the bank allegedly charged the borrowers an initial interest rate higher than the sum of the Index and Margin.

Wells Fargo – Class Action Lawsuit – Mortgage Modification

Wells Fargo has a class action lawsuit filed against it that claims that the bank illegally refused to grant permanent loan modifications that it had promised  homeowners who successfully completed a trial mortgage modification under the Homeowner Affordable Modification Program (HAMP).

It states Wells Fargo committed breaches of contract and violated California consumer protection laws by misrepresenting the terms of the HAMP trial periods plans (TPP), designed to be a path toward a permanent mortgage modification.

Homeowners were give lower mortgage payments  for 3 months to prove they could make payments.  They stated in a letter received by these homeowners that  if they “make those payments successfully and fulfill all the trial period conditions, we will permanently modify your mortgage loan.”

This did not occur and the lawsuit states that it was a scheme to get homeowners to send in their payments – and that they never intended to make them permanent.  Wells Fargo got millions of dollars from this during the period.

Update 3/16/2012

Its interesting to note the following:

The CEO of Wells Fargo John Stumpf received $17.9 million in compensation in 2011.  Wells Fargo’s net income was $15.87 billion in 2011, up from $12.36 billion in 2010.

More information on Mortgage Modification Lawsuits

Class Action Lawsuit Against Bank of America Over Mortgage Modification Handling

Washington homeowners have sued Bank of America because the bank is refusing to part with government funds that were to be used to help homeowners who were facing foreclosure. The Bank of America class action lawsuit attorneys want to communicate with eligible home owners who believe were prevented from or wrongfully not allowed a permanent mortgage adjustment as stated in the Home Assistance Modification Program (HAMP).  The bank has over a million morgages that potentially can be helped but only offered help to 12,761 mortgage holders.

Bank of America Mortgage Class Action Lawsuit

This lawsuit which has been filed in U.S. District Court, makes the claim that Bank of America attempts to slow or prevent Washington homeowners from accessing the Troubled Asset Relief Program (TARP) funds.  It is stated that they deliberately ignore the homeowner’s wish to make adjustments to their mortgage or in fact any other different solutions that would stop their homes from foreclosure.

Bank of America received over twenty five billion dollars in government bailout money.  This is money that had been financed by U.S. taxpayers and was specifically put aside to help homeowners who were facing difficulties so that they could try and avoid foreclosure.  The bank, by accepting the money, was obliged to try and help homeowners find ways around foreclosure by reducing monthly mortgage payments.  The lawsuits states that this did not happen.

The bank should be offering a revised 3 month payment plan and if this is successful then they must offer this as a permanent modification to the mortgage plan.  The lawsuit claims this is not happening and that the bank interfered with requests from homeowners and denied them funds to help prevent them from entering foreclosure.  The result was that Bank of America benefited from the funds and additionally acquired additional fees and interest rates from the homeowners.

Homeowners who did not receive an adequate response from the bank after April 13, 2009 can join the suit.

During July, 2011 Bank of America lost its bid to get the lawsuit dismissed.  The judge stated that homeowners who qualified for HAMP and did not receive any modification could continue with claims against the bank.

More information related to  Mortgage Modification Lawsuits


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