by Brian Mahany
The term HAMP probably doesn’t mean much, unless you are one of the tens of millions of Americans struggling to pay their mortgage. HAMP stands for the Home Affordable Mortgage Program rolled out by the U.S. Treasury Department after the housing and mortgage crisis of 2008. The program includes mortgage modifications, rate reductions and deferred payments. Mortgage lenders will often offer a “trial period’ in which the mortgage is modified. If the homeowner qualifies and makes the trial payments, the modifications can become permanent.
The program sounds good on paper. Reality, however, is a different story. We have spoken with or met homeowners who tell horror stories of contradictory information, lost paperwork (in one case 47 times), and promises not honored. If this isn’t stressful enough, remember that the participating homeowners live under the constant shadow of being thrown out onto the street.
Although we are personally aware of horror cases involving Wells Fargo and Bank of America, those banks aren’t alone.
In 2010, a homeowner in Illinois sued Wells Fargo for not honoring a HAMP modification offer. In January of 2011, a federal judge threw out the suit in its entirety. The judge ruled that the HAMP law does not give homeowners a private right of action to sue. In other words, HAMP is a law that offers no remedy.
Luckily, the homeowner wouldn’t take no for an answer. She appealed to the 7th Circuit Court of Appeals. Last month the court overturned the trial judge’s order effectively reinstating the case.
The court ruled that although the HAMP law does not explicitly permit individuals to sue, it also doesn’t prevent them from doing so either. The court also ruled that under state law, the homeowner was allowed to pursue claims of consumer fraud, misrepresentation and breach of contract.
The ruling means that the homeowner gets her day in court. The lender in this case is Wells Fargo. The homeowner, Lori Wigod, says she made all her trial payments and did everything asked of her. Despite promises that she could get a modification, Wells Fargo changed their mind.
Of course, Wells Fargo says it did nothing wrong and the case is far from over. By allowing the case to go forward, however, homeowners nationwide may get their chance to tell their stories to a jury.
We are aware of roughly 80 HAMP lawsuits that have been filed. Although the 7th Circuit opinion is not binding across the U.S., it now represents the law of the land in Illinois, Indiana and Wisconsin. It carries considerable weight everywhere else.
Until now, homeowners had no real remedy. They could complain to HUD and hope that overworked staffers would intervene. HUD has the ability to police the program but not award damages. The other route was to sue knowing that the bank would probably have the case thrown out on procedural technicalities. Last month’s ruling now levels the playing field.
Big lenders are afraid of juries. While banks once occupied a higher position in society, the mortgage meltdown and pure greed on Wall Street has left many ordinary Americans pissed off and angry. Just about everyone knows someone who was misled or subject to arbitrary foreclosure procedures by a large lender. Allied’ Jim Hodge who allegedly liked to “play God” or the managing directors at Goldman Sachs who called their own clients “muppets” are two examples.
If one of these cases gets to a jury, watch out. Last year’s Occupy Wall Street garnered headlines but accomplished little reform. Put Bank of America in front of 12 jurors and let them see how a homeowner with special needs children was repeatedly threatened with foreclosure even though she made all her trial payments and I think we will see some real reform.
If you have been victimized by a lender, were improperly denied a HAMP modification or were subject to abusive foreclosure practices, give us a call. Our anti-fraud lawyers want to speak to you. If you worked at one of these lenders and have information of illegal conduct, contact us too. Whistleblowers can often receive huge cash payments from the government if heir information leads to a recovery to a government program or taxpayers.*
For more information, contact attorney Anthony Dietz by email at . Are you a potential whistleblower or need to speak to someone right away? Contact attorney Brian Mahany by telephone at (direct). All inquiries are kept in strict confidence.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Illinois; Portland, Maine or Minneapolis, Minnesota. Services available in many jurisdictions.
*We are co-counsel in the largest federal false claims act case against a mortgage lender, HUD’s 2.4 billion action against Allied Home Mortgage.