Judge breaks up BOA class action

by Ryan Smith06 Sep 2013

A federal judge ruled Wednesday that a lawsuit accusing Bank of America of breaking promises to homeowners won’t proceed as a class action, according to a Reuters report.

U.S. District Judge Rya Zobel said Wednesday that while the plaintiffs’ claims “may well be meritorious,” they “rest on so many individual factual questions that they cannot sensibly be adjudicated on a classwide basis.”

The lawsuit accuses Bank of America of failing to comply with the rules of the Home Affordable Modification Program, or HAMP. Created in 2009, HAMP was intended to help distressed homeowners avoid foreclosure. To apply for the program, borrowers submit proof of their finances and make trial payments for a time. If they don’t qualify for the program, lenders are supposed to notify them and work with them to find an alternative foreclosure prevention strategy.

The suit, filed by 43 individuals and couples across 26 states, alleges that Bank of America didn’t live up to its obligations under HAMP, driving many distressed homeowners into foreclosure, Reuters reported.

“This case demonstrates the vast frustration that many Americans have felt over the mismanagement of the HAMP modification process," Zobel wrote in his Wednesday ruling. “Plaintiffs have plausibly alleged that Bank of America utterly failed to administer its HAMP modifications in a timely and efficient way; that in many cases it lost documents, or pretended it had not received them, or arbitrarily denied permanent modifications.”

Bank of America isn’t the only big lender in trouble over HAMP. Wells Fargo is currently facing two class-action suits over its alleged failure to offer permanent loan modifications to borrowers who met the HAMP requirements.

A district court had dismissed the lawsuits, but a the 9th Circuit Court of Appeals reversed the decision last month, saying that Wells Fargo was contractually obligated to offer permanent modifications to borrowers who met the right criteria. One judge on the 9th Circuit’s three judge panel noted that HAMP “seems to have created more litigation than it has happy homeowners.”


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