A federal judge in Washington is the latest to dismiss a lawsuit brought by homeowners frustrated with the administration of the federal Home Affordable Modification Program (HAMP).
Yesterday, U.S. District Court Judge Barbara Rothstein dismissed (PDF) a suit brought by a group of New York homeowners against a private mortgage servicer, Fannie Mae and the U.S. Department of Treasury. The homeowners claimed they were unlawfully denied consideration and access to the program.
Rothstein, who normally sits in the U.S. District Court for the Western District of Washington but was brought in to hear this case, wrote that the homeowners lacked standing to sue. Relying on similar decisions in at least eight other states, she found that borrowers were not third-party beneficiaries to HAMP contracts between mortgage companies and Fannie Mae.
The homeowners had also argued in their complaint (PDF) that the mortgage company named in this case, Aurora Loan Services Inc., violated their right to access the program by mismanaging their applications, providing bad information or, in certain cases, failing to communicate at all.
Rothstein said she sympathized with the plaintiffs’ frustrations, but wrote that homeowners do not have an absolute right to have a loan modification through the HAMP program.
“While the court sympathizes with Plaintiffs’ frustrations in navigating (or attempting to navigate) a system rife with contradictions, non-responsiveness, and inefficiency, not every frustration is enforceable in court,” she wrote.
Fannie Mae was tasked with managing HAMP, and entered into contracts with mortgage providers and services to carry it out. Under the program, the mortgage companies – in this case, Aurora – were given incentives to consider loan modifications to homeowners facing foreclosure.
The plaintiffs were represented by the Legal Aid Society in New York and New York’s Fitzpatrick, Cella Harper & Scinto. Legal Aid attorney Oda Friedheim said she thought the decision didn’t reflect the fact that some of the suits cited by Rothstein dealt with homeowners suing over their rejection from HAMP, whereas in this case, the plaintiffs were suing over the lack of consideration for inclusion in the program.
“We were disappointed of course,” she said. “Our argument is that the borrowers have a right to be considered. “
Treasury spokeswoman Andrea Risotto declined to comment. Aurora and its attorney, Michael Agoglia of Morrison & Foerster’s San Francisco office, could not immediately be reached for comment. Fannie Mae and its counsel, Wilmer Cutler Pickering Hale & Dorr attorneys Noah Levine and Seth Waxman, also could not immediately be reached this afternoon.
I think it's unfortunate that these Banks play with people's emotions of giving them false hope in keeping their home by providing them with trial payments just to be foreclosed on within a few months. I have heard this before happening to people and they should be able to sue. If the bank has no intention of letting someone keep their home why bother with trial payments to give them a false sense of security????? Bank of America is the worst offender.
Posted by: Bernice | July 17, 2012 at 03:17 PM
I completely agree with the judges verdict/dismissal here.
I mean come on, how can someone sue a business for not providing their services to someone. A business can choose to do business with whomsoever they wish!
Their case totally lacked grounds to sue.
Posted by: small business loans | June 22, 2012 at 05:33 PM
In this case, homeowner were given incentives to consider loan modifications facing foreclosure.
Posted by: Tom Henry | June 02, 2012 at 08:48 AM
Under this program, they were given incentives to consider loan modifications to homeowners facing foreclosure.
Posted by: Tom Henry | May 28, 2012 at 11:29 PM
U.S. banks continue to improve their loan modification methods, so one needs to have a proper shields as to overcome in any of the financial instincts, rather then to gain a or sell mortgage to go in for for banks get the same done by a authorised FI's
Posted by: home loan modification program | March 14, 2012 at 07:40 AM
I just read over a friend's Fannie Mae Mortgage Modification info. that Bank of America just sent. (after 3 years of trying!) My friend was denied under HAMP so was offered this.
After reading it over I can see why Roger Butt's son may still be foreclosed on. The information states that if the trial payments are made on time the foreclosure process will be halted. HOWEVER, later in the information it also states that they reserve the right to hold and apply any trial payments to the oldest delinquent payment until they are caught up. Soooo. Unless the homeowner is already CURRENT on their mortgage, it seems to me it will be impossible to make a current trial period payment to avoid foreclosure.
Also, the information sent fails to inform how the mortgage will actually be modified. Will everything just be tacked onto the back end (i.e. delayed), or will it be a REAL modification and or also include some forgiveness. Highly doubtful as Fannie Mae has made it very clear they would prefer to foreclose and will NOT be entering into ANY kind of forgiveness as Wells Fargo or other companies have done for people with ARM.
P.S. My friend had a good FIXED rate but is self-employed and has been trying for 3 years PRIOR to falling behind with still no luck until now. I think this is another deal with the devil but it's all they have...
Posted by: Disgusted in NJ | November 08, 2011 at 02:25 PM
My son has tried for two years to get into Fannie Mae's Home Loan Modification Program. He is a self-employed businessman who has had his own cabling company over ten years. Most of his time is spent on the road and that is why I am writing this on his behalf.
Three months ago he was finally accepted into BoA/Fannie Mae's trial period program.
The documentation he received said he would remain in this program for 3-6 months. When/if he completed the program satifactorly he would he would officially be transferred in the permanent program. Fair enough.
He made his new required payment in June and again in July. Then without a phone call or explanation he received six letters on Saturday, 30 July telling him his home would be sold in a foreclosure sale on 25 August.
He cannot find anyone to tell him why this is happening since he is in the trial program and has made all payments on time.
Bank of America (Lender) will not answer why? The banks Lawyer said he has not received any instructions to cancel the Foreclosure sale.
His Congresswoman is trying to help...and also now his U.S. Senator. You would think someone could look up his case number and tell why this Foreclosure sale action is taking place in three short days-----with no explanation.
Can anyone help or direct us to stop this foreclosure sale this Thursday???
Posted by: Roger Butts | August 22, 2011 at 04:25 PM
People are just frustrated with the persisting economic crisis coupled with stubbornly high jobless rate. Remember, the financial crisis stemmed from bankcruptcies of the big lenders.
Posted by: Home Loans Perth | August 03, 2011 at 07:37 PM
Banks sell mortgage notes for 70% of the balance. They also sell 2nd mortgage notes for 60%. The F D I C will cover up to 95% of the investor losses. I think it's a great opportunity for the banks to be selfish.Tough Luck for the consumer.
Posted by: Charles Tate | June 16, 2011 at 07:21 AM