Predatory Lending - Written by Beasley Allen on Friday, April 16, 2010 16:08 - 147 Comments
Two homeowners have filed a lawsuit in U.S. District Court in Massachusetts against Wells Fargo for failing to modify their mortgages through the federal home modification program. According to the allegations in the lawsuit, Wells Fargo entered into agreements for temporary trial modifications under the Home Affordable Modification Program. Under this program, lenders agree to reduce homeowners’ monthly mortgage payments to no more than 31% of their income. The lawsuit also says the homeowners complied with the written agreement and submitted required documentation, but Wells Fargo “ignored its contractual obligation to modify loans permanently.”
The Home Affordable Modification Program is a cornerstone of the Obama administration’s efforts to reduce foreclosures, and it is intended to assist up to 4 million homeowners in the next three years. To date, about a million trial modifications have been initiated, and about 116,000 have become permanent. For a trial modification to become permanent, homeowners must make three payments and submit proof of their income.
The lawsuit is seeking to be certified as class action, claiming “hundreds, if not thousands of Massachusetts homeowners” may be in similar situations. The lawsuit names Wells Fargo Bank, as well as Wells Fargo Home Mortgage of West Des Moines and its operating unit, America’s Servicing Co. in Fort Mills, South Carolina, as Defendants. Wells Fargo estimates that only half of the 92,000 homeowners who currently have trial modifications pending will be eligible to participate in the program because several do not return any or all of the required documentation, and then others who have returned all the documentation will be deemed ineligible after documents have been reviewed.
Under program guidelines, servicers had previously been able to collect information from homeowners throughout the trial period. However, beginning June 1st, the Treasury is requiring servicers to verify income before putting homeowners in a trial modification. Wells Fargo, which was to begin doing this on March 1st, stated this “better enables customers to understand if they qualify and what their final payment relief likely will be.” If you need more information on this type litigation contact Bill Robertson, a lawyer in our firm, at 800-898-2034 or by email at Bill.Robertson@beasleyallen.com.
Source: Des Moines Register
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