Search Amazon.com Kindle Store for Fannie and FreddieBank Slammed With Another Class Action
By JOE HARRIS
ST. LOUIS (CN) - The seemingly endless string of class actions against Bank of America's foreclosure policies continued here in Federal Court. The class claims that BofA and BAC Home Loans Servicing refuse to participate in foreclosure prevention programs despite taking $25 billion in Troubled Asset Relief Program money.
Lead plaintiff Susan Fraser says Bank of America, by accepting the TARP money, agreed to participate in at least one TARP-authorized program to minimize foreclosures. The complaint echoes similar complaints filed last week by the attorneys general of Arizona and Nevada. BAC Home Loans Servicing is also named as a defendant in the St. Louis complaint.
Bank of America signed a contract with the U.S. Treasury on April 17, 2009 agreeing to comply with the Home Affordable Modification Program (HAMP) to perform loan modifications and other foreclosure prevention services, the St. Louis complaint states.
The class claims the HAMP program requires Bank of America to identify loans that are subject to modification; collect financial and other personal information from the homeowners to evaluate whether the homeowner is eligible for modification; institute a modified loan with a reduced payment amount as per a mandated formula that is effective for a three-month trial period; and provide a permanently modified loan to those homeowners who comply with the requirements during the trial period.
"Though Bank of America accepted $25 billion in TARP funds and entered into a contract obligating itself to comply with the HAMP directives and to extend loan modifications for the benefit of distressed homeowners, Bank of America has systematically failed to comply with the terms of the HAMP directives and has regularly and repeatedly violated several of its prohibitions," the complaint states.
"Under HAMP, the federal government incentivizes participating servicers to make adjustments to existing mortgage obligations in order to make the monthly payments more affordable. Servicers receive $1,000 for each HAMP modification. However, this incentive is countered by a number of financial factors that make it more profitable for a mortgage for a mortgage servicer such as Bank of America to avoid modification and to continue to keep a mortgage in a state of default or distress and to push loans towards foreclosure. This is especially true in cases where the mortgage is owned by a third-party investor and is merely serviced by the servicer such as Bank of America. On information and belief, Bank of America does not own a significant majority of the loans on which it functions as a servicer."
Fraser says the financial factors that discourage Bank of America from fully participating in HAMP include having to repurchase loans to modify the loan and its collection of default fees.
"Rather than allocating adequate resources and working diligently to reduce the number of loans in danger of default by establishing permanent modifications, Bank of America has serially strung out, delayed, and otherwise hindered the modification processes that it contractually undertook to facilitate when it accepted billions of dollars from the United States," the complaint states. "Bank of America's delay and obstruction tactics have taken various forms with the common result that homeowners with loans serviced by Bank of America, who are eligible for permanent loan modifications, and who have met the requirements for participation in the HAMP program, have not received permanent loan modifications to which they are entitled."
The class consists of all eligible homeowners who have been serviced by one or both defendants who have not received a permanent modified loan. The class seeks an injunction and damages. It is represented by Michael Flannery with Carey Danis & Lowe.
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