ow.ly/maGXP Bank of America Allegedly Lied to Homeowners Seeking Modifications t’s no surprise that Bank of America is caught up in yet another scandal. This bank is no stranger to lawsuits for various practices, and the bank is now the subject of a class action lawsuit involving the Home Affordable Modification Program (HAMP). HAMP was a government program supported by the U.S. Department of the Treasury during the recession, after an overall crash in the real estate market. The intent was to help homeowners who were unable to make their mortgage payments during the recession, whether because of the loss of a job or because the banks had encouraged homeowners to take out mortgages that were too expensive in the first place. Rather than abandoning houses on which borrowers owed more than the decreased value of the asset, and rather than needing to face a foreclosure, homeowners could apply for a mortgage modification, where the bank would reduce the amount of principal owed and write off the loss with help from the government. There are several requirements that must be met for a homeowner to qualify for a mortgage modification. The loan must be owned by Fannie Mae or Freddie Mac. The remaining loan balance must be at least 80 percent of the home’s value. The borrower must have not been late with a payment more than once over the past year. The loan must have been originated on or before May 31, 2009. It has been more profitable for Bank of America to deny applications for mortgage modifications, even those who qualify, and in some cases, redirect struggling homeowners to the bank’s own refinancing options. Six former Bank of America employees and one employee of a contractor for Bank of America involved with the HAMP process have given statements to a federal court in Boston detailing exactly how Bank of America lied to its customers. These are among the former employees’ allegations: Bank of America lied to...
Posted on: Wed, 19 Jun 2013 06:57:54 +0000