B of A Sued Over Mods

Bank of America has moved 32,900 customers into permanent modifications under the Home Affordable Modification Program as of April 8, with over 12,200 of those coming in the prior month. Since January 2008, it has done more than 520,000 through its own programs and it has 260,000 active trial modifications in HAMP.

But that still has not stopped B of A from being the target of a pair of lawsuits from the same law firm alleging the company has ignored what it terms “requests to make reasonable mortgage adjustments or other alternative solutions that would prevent homes from being foreclosed."

The first case was filed by the law firm of Hagens Berman Sobol Shapiro in March in the U.S. District Court for the Western District of Washington seeking class-action status for homeowners there. A similar suit has now been filed in the U.S. District Court for the Northern District of California. The suits are premised on B of A’s acceptance of Troubled Asset Relief Program funds, which then mandated participation in HAMP. The filings on both cases argue that financial factors allegedly make it more profitable for servicers like B of A “to avoid modification and continue to keep a mortgage in a state of default or distress and to push loans towards foreclosure.”

In the California case, the plaintiffs, Suzanne and Greg Bayramian, were having financial difficulties. They first asked for help (by requesting a term extension) from B of A and were still current on their mortgage at that time, according to the court filing.

Eventually they signed an agreement for a loan extension program where they would not have to make payments for three months. The suit claims that B of A did not tell them prior to signing the agreement that any further help or a loan modification was not possible until there were 12 months of consecutive payments made.

Meanwhile, the HAMP program was put into place and the Bayramians talked with a B of A employee regarding participation. After a November 2008 conversation, they never heard from the employee again.

The Bayramians tried for a short sale but allegedly B of A would not agree to one unless they agreed the bank could come after them for any deficiency. The homeowners refused. Eventually they received two letters from the bank saying they were ineligible for a workout because they declined loss mitigigation assistance. The Bayramians filed for Chapter 7 protection under the Bankruptcy Code.

Among the remedies sought in the case is for the court to order B of A to offer permanent modifications to the Bayramians and other members of the class. A spokeswoman for B of A said it is reviewing the Bayramian lawsuit and it has not comment at this time.