• DYE CULIK PC | Consumer Protection Division

Bank of America Headed to Trial For Wrongful Foreclosure

In a recent decision on the HAMP loan modification program, a magistrate judge of the US District Court for Massachusetts ruled that homeowners who were foreclosed on while under consideration for a loan modification may proceed with a lawsuit against Bank of America.

Bank of America argued in a motion for summary judgment, which is a motion to dismiss the case, that its foreclosure did not cause any damage or loss to the homeowner-plaintiffs. Bank of America did not dispute that its actions were illegal.

In response, Culik Law argued that the homeowners lost the benefit of the loan modification, and had their home foreclosed upon, which was an unfair and deceptive business practice under Massachusetts law. The homeowners had been repeatedly told that they qualified for a loan modification.

Deciding in favor of the homeowners, the judge rejected Bank of America’s argument, writing that the homeowners would have been eligible for a loan modification under HAMP.

“Thus, it is clear from the HAMP regulations that a servicers’ simplistic conclusion that a borrower may default even after the loan is modified is insufficient to justify a failure to offer a loan modification under HAMP.”

The case against Bank of America has now been scheduled for trial.

The opinion is available here.

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