Another lawsuit has been filed against Wells Fargo for illegally denying a loan modification under the Obama Administration’s Home Affordable Modification Program (HAMP). The lawsuit charges Wells Fargo with making misrepresentations in connection with the homeowner’s HAMP application, and claims $4,000,000.
The plaintiff, a Baltimore County consumer, turned to Wells Fargo for help when she incurred financial hardship. From 2001 until 2007, the plaintiff lived with her mother, who contributed to the mortgage. The mother passed away in 2007, causing the plaintiff to fall behind on her mortgage payments.
The lawsuit alleges that the plaintiff qualified for a loan modification under HAMP. The plaintiff, as stated in the complaint, submitted all of her required financial documentation to Wells Fargo, which clearly showed that she qualified for a HAMP modification.
Shortly after receiving the documentation, Wells Fargo began to threaten foreclosure. Wells Fargo also told the plaintiff that she had not submitted the required documentation. The lawsuit alleges that Wells Fargo repeatedly lost or ignored the documentation.
The plaintiff submitted the required documentation on four separate occasions due to Wells Fargo’s repeated demands for resubmission, the lawsuit alleges. Nevertheless, Wells Fargo determined the plaintiff did not qualify, and denied the HAMP modification.
“It’s highway robbery”, stated Jason Ostendorf, the homeowner’s attorney. “These banks get a $700 Billion bailout with our taxpayer money. In return, they agree with the government to comply with HAMP. Then they refuse to offer eligible homeowners the required loan modifications. The banks just take our money and run.”
News organizations, such as the New York Times, have reported on the banking practice of denying loan modifications in order to seek “lucrative fees on delinquent loans.” For instance, the U.S. Treasury’s latest “Making Home Affordable Report” suggests that this motive applies to Wells Fargo in particular. The report shows that Wells Fargo has provided only 9,761 HAMP trial modifications, out of the 110,807 it is presently required to provide. This means that Wells Fargo currently complies with its legal obligations under HAMP less than 10% of the time.
The lawsuit was filed in the Circuit Court for Baltimore County, Maryland.