A class-action complaint has been filed by Berger & Montague PC on behalf of all Pennsylvania homeowners whose mortgage loans have been serviced by CitiMortgage Inc.
According to the complaint issued in District Court for the Eastern District of Pennsylvania, the St. Louis-based lender entered into standardized written temporary loan modification contracts with certain borrowers who were either prequalified for loan modifications under the Department of Treasury’s Home Affordable Modification Program, or with borrowers who were presumed to have been prequalified to enter into trial period plan contracts.
The TPP contracts promised that if borrowers made the reduced monthly loan payments presented in their contract for a trial period of three months and submitted the proper documentation to the mortgage company that was requested by the lender, their loans would be permanently modified in the fourth month. After this happens, the borrower would only need to pay the reduced amount.
Even though the borrowers fulfilled all of their obligations under their respective TPP contracts, the lender allegedly breached its contractual obligations by failing to permanently modify these borrowers’ loans, the complaint said.
Under the Troubled Asset Relief Program created to help struggling homeowners avoid foreclosure, CitiMortgage accepted $45 billion in government bailout money. Rather than honoring its contractual duties to modify mortgage loans it services under HAMP, the lender allegedly intentionally set up its loan modification program to fail.
The complaint claims that the lender set up the TPP program to comply with TARP’s conditions, but had no goal of allowing widespread modification for homeowners in need. The complaint said the loan servicer systematically slows or prevents homeowners’ requests to modify mortgages by depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up collecting the financial benefits provided by TARP funds and also receives higher fees and interest rates associated with stressed home loans.
As of February 2011, Pennsylvania was ranked as the 17th highest state for foreclosure listings, according to RealtyTrac, with 3,110 foreclosure properties.
