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.