Homeowners Get Big Win in Massachusetts

Recently, there has been a wave of class action lawsuits brought by homeowners against several of the nation’s largest mortgage lenders for failing to comply with the terms of the United States Treasury’s Home Affordable Modification Program (“HAMP”). HAMP was created by the federal government in August 2009 to combat the national foreclosure crisis. The program was specifically designed to allow eligible homeowners who are about to default on their mortgages to save their homes by modifying the terms of their loans. Despite the government’s noble intentions, HAMP has been largely unsuccessful.  Mortgage service providers have been accused of unjustifiably denying permanent modifications by losing paperwork, claiming ignorance of payments made and papers submitted, and engaging in other evasive conduct which makes it extraordinarily difficult, if not completely impossible, for eligible homeowners to obtain loan modifications.

In January 2011, Judge F. Dennis Saylor of the  Massachusetts federal court issued a decision that gives homeowners some hope for relief.   Bosque v. Wells Fargo Bank, N.A., C.A. No. 10-10311-FDS, 2011 U.S. Dist. LEXIS 8509 (D. Mass. Jan. 26, 2011).  In Bosque, even after the homeowners complied in all respects with Wells Fargo’s requirements during a three month trial mortgage modification period, they were never notified of their permanent loan modification status. The plaintiffs contended that they, like hundreds, if not thousands, of Massachusetts homeowners, were deprived of the opportunity to cure their delinquencies, pay their mortgage loans and save their homes.

Judge Saylor denied Well Fargo’s motion to dismiss plaintiff’s claims against it for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, and violation of the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A. and allowed expedited discovery regarding the bank’s HAMP eligibility determination and foreclosure procedures.

Abbey Spanier is following the Bosque litigation closely and will report any significant developments.