The National Consumer Law Center (NCLC) out of Boston, Massachusetts, has filed four class action law suits against Bank of America, J.P. Morgan Chase Bank, One West Bank, and Wells Fargo on behalf of Massachusetts residents. The lawsuit claims that the above mentioned lending institutions have failed to uphold agreements with borrowers to approve loan modifications and prevent foreclosure under the terms of President Obama’s Home Affordable Modification Plan (HAMP).
Borrowers all over the country can thank the NCLC for bringing attention to this matter on such a large scale. There are plenty of mortgage loan borrowers out there who were told that successful payment of mortgage bills during their trial loan modification period would allow their loans to be permanently modified, but the lenders never came through on their promises, and it appears that the NCLC has decided to spearhead efforts to make right with victim’s of unethical lending practices. Even though the efforts of the NCLC are currently focused on Massachusetts, the outcome of the case will most likely be felt nationwide.
If the NCLC is successful in their efforts, the lenders listed above will have to answer for the lies they told their borrowers while administering various loan modification programs. Even though the lawsuit only targets the practices of lenders in regards to the federal HAMP program, this case will shine a lot of light on private loan modification programs as well.
The reason why so many borrowers feel that they have been lied to is due in large part to poor administrative and management practices within lending institutions. Lender representatives (who are really just customer service or collection agents) have been allowed to lie to borrowers over the phone in an effort to move files off of their desks and into the hands of somebody else who then has little to no knowledge of any lies or promises made to the borrower. Few borrowers, except those represented by attorneys, are ever even allowed to talk with representatives from the loss mitigation departments of lenders, who would actually be responsible for discussing the details of a loan modification. It is this same mismanagement of resources and personnel that has caused thousands of pieces of documents and paperwork to be misplaced, mislabeled, and lost, causing further delay in the process as borrowers re-submit necessary documentation.
Experts agree that borrowers should never be satisfied with promises made over the phone, since these promises will most likely be denied by lenders when it becomes convenient for them. Borrowers should always ask for written documentation signed by a representative of the lender that details any promises made. If the lender refuses to issue such a document, the borrower should assume the promise is as good as worthless. As soon as it becomes apparent to the borrower that their lender is trying to issue false promises, the borrower should contact an experienced foreclosure attorney for guidance. The attorney will be able to cut through the lender lies and review the true financial status of the borrower in order to paint an accurate picture of what options the borrower has. If the borrower is able to receive documented proof of a promise that was made and then reneged on by the lender, the borrower will have a much stronger case against their lender should the case go to court.