Borrowers allegedly misled, defrauded
A new class action lawsuit against Wells Fargo claims that the bank illegally refused to grant permanent loan modifications promised to homeowners who successfully completed a trial mortgage modification under the Home Affordable Modification Program (HAMP). It was discovered that the $75 billion government funded program failed to grant permanent modifications nearly half of the time, which most consider a failure of the program which we have long called a colossal failure.
A new suit, filed in the U.S. District Court for the Northern District of California, has taken Wells Fargo to task for their role in failing to help the homeowners they and the government had promised those who successfully completed the trial would be granted. The suit claims that Wells Fargo violated California’s consumer protection laws by misrepresenting the terms of the HAMP trial period plans as well as breaches of contract.
As part of the plan, the suit alleges that Wells Fargo and borrowers agreed to a reduced mortgage payment for three months as a trial period to prove their ability to pay that new lowered amount, but despite that agreement, homeowners are claiming they were not granted a permanent loan modification, the entire point of the HAMP program.
Anatomy of an allegedly illegal modification denial
According to lawyers representing the plaintiff, Amira Jackmon bought her home in 2005, lost value in her home when the market crashed and was unable to refinance after being laid off. Wells Fargo offered a loan modification if she could make all payments on time under HAMP requirements; they signed the agreement and she made all payments on time and was then instructed to make four more months of payments at that rate. After the trial period ended in 2010, Wells Fargo allegedly told her that her request for a permanent modification was denied and the foreclosure process began. Her home was sold at a trustee sale in May of 2011.
The lawsuit claims the trial program was “a ruse designed to induce consumers into sending payments to Wells Fargo, even when Wells Fargo knew that it had no intention of granting the permanent loan modification it promised.” The suit claims that Wells Fargo misled homeowners to the tune of several million dollars and they are seeking restitution of payments made and they seek to recover all other funds and property lost in connection with the alleged illegal activities of Wells Fargo.
“We will prove in court that Wells Fargo’s operations turned a program designed to help homeowners into a revenue stream for the bank,” the plaintiff’s lawyer said in a statement.