The Home Affordable Modification Program began in 2009 with the hope of helping millions of homeowners to modify their underwater mortgages to help them get above water more quickly. It has not been much of a success for many reasons as we outlined recently. The main reason that’s cropped up recently is banks’ incompetence. Some people believe large banks could have modified some mortgages and prevented foreclosures but didn’t. Two years ago, homeowners began filing class action lawsuits against Bank of America and Citi for bad faith dealing in not processing their loan modifications. These lawsuits were consolidated in Massachusetts federal court and California Central District Court. Here are five things to know.
(1) The type of consolidation is called “multidistrict litigation” (“MDL” for short), which differs from class action lawsuits in a few important ways. Namely, MDL allows plaintiffs to maintain their individual cases for the purposes of damages while class actions are designed to distribute easily quantifiable damages evenly among a group of plaintiffs, usually in a financial context. Plaintiffs who suffer different damages are compensated differently in MDL, which is one of the system’s primary benefits. It also hastens the litigation process to save all parties time and money.
(2) The caption for the Bank of America case is IN RE: Bank of America Home Affordable Modification Program (HAMP) Contract Litigation (MDL – 2193), and according to the Judicial Panel on Multidistrict Litigation, the judicial body that decides on MDL motions, as of September 2012, 32 cases actions were pending against Bank of America.
(3) The Citi HAMP MDL is IN RE: CitiMortgage, Inc., Home Affordable Modification Program (HAMP) Contract Litigation (MDL – 2274). It is before Judge Dale S. Fischer in Central California and contains only 11 cases.
(4) The MDLs include plaintiffs who obtained trial modifications with their mortgagees but were denied permanent modifications as they’d requested. They are requesting that their modifications be made permanent per their agreement with the banks.
(5) The banks, for their part, don’t believe they breached any obligation to the borrowers, and they were only required to consider granting a permanent modification, not give it to them as a contractual right.
These MDLs have been pending for a long time, and there hasn’t been much news about them for a while. Thus, contacting a HAMP lawyer to discuss joining either MDL might not be an effective long-term solution to an underwater mortgage. Instead, consider discussing your mortgage problem with an experienced Las Vegas bankruptcy lawyer.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.