Home Affordable Modifications Program Lawsuit in Boston

In March 2009, Congress passed the HAMP, the Home Affordable Modifications Program, in an attempt to assist folks refinance and modify their mortgages. Recently, in Boston, lawyers representing home owners who were denied access to the program filed suit in federal court asking the court to stop foreclosures of those homes. If successful, the lawsuit could affect thousands of homeowners throughout Massachusetts.

The program is designed to be a debt reduction mechanism, with the federal government and the mortgage lender each contributing. The math works like this: successful applicants will have to pay no more than 38% of their monthly income for principal, mortgage interest, taxes and condo fees. Then the US Treasury Department will match any additional reductions down to 31% of your household income. Further, if the above reduces the payments by 6% or more, you get $1000 per year (up to five years) towards reducing the principal loan. While the benefits for homeowners is a monthly reduction in expenses, the benefit to lenders is clear too: they do not have to go through the costs of foreclosure and taking the likely loss on the mortgage, and, they get $1,000 per year from the government for participating.
The goal of the lawsuits is to stop, and slow down, foreclosures by Bank of America, JP Morgan Chase and Wells Fargo. According to the plaintiff attorneys, those banks are not complying with the HAMP rules – they are not processing requests under HAMP and they are losing documents so that homeowners can’t take advantage of the program. Of course, the banks have responded with motions to dismiss.
We don’t know about the validity of the lawsuit, or the banks’ defenses. We urge anyone who can’t afford their mortgage to consult with a qualified Massachusetts attorney to discuss your options.