Just this past week, the Bank of America Corporation lost a bid to dismiss a series of legal challenges that financially troubled homeowners in 19 states wish to bring against the bank. Recently, a US District Court judge in Boston ruled against the lender in another, similar case.
The case that is being brought against the Bank of America is the result of 26 consolidated cases that homeowners who were seeking to stop their foreclosures filed. Allegedly, Bank of America broke a “binding contract” after the bank failed to grant permanent mortgage loan modifications after complying with a trial period under the federal Home Affordable Loan Modification Program, called HAMP.
What Is HAMP?
HAMP was started back in 2009 as a way to allow homeowners to avoid foreclosures, which were storming the economy at the time and starting to threaten the overall financial stability of the country. In HAMP, homeowners who are in danger of losing their homes agree to undergo a trial period where they pay a reduced amount on the mortgage for a fixed period of time in return for a permanent adjustment on their mortgage payment rates. In the case of Bank of America and other lenders, however, there have been reports of banks following the parameters of HAMP a little bit less scrupulously than they should have.
As of now, Bank of America had no comment to offer regarding the situation and the 26 cases being brought against the bank have yet to be judged. Bank of America is not alone, however – the records say that nearly 1.9 million homeowners were given trial loan modifications under HAMP, but fewer than half ended up receiving the permanent loan adjustment.