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Litigation to continue over failure to obtain loan modifications

On Thursday a district judge ruled that litigation against the Bank of American can continue forward. The claim is that the lender broke a “binding contract” when it failed to provide homeowners with a permanent mortgage modification, even after those homeowners had successfully fulfilled all of the requirements of a temporary modification.

All of these modifications were under the highly criticized federal program often referred to as HAMP, which stands for Home Affordable Loan Modification Program.

According to federal records, the case was started last year after a number of homeowners who had met the requirements of their temporary modification were not granted a permanent reduction to their payments.

Nationwide this is also a problem, as out of the close to 1.9 million homeowners who were given a temporary modification, less than half were actually granted a permanent one.

Aside from Bank of America, JPMorgan Chase, Wells Fargo Home Mortgage, Litton Loan Servicing LP and CitiMortgage have also all been sued on similar failure to provide mortgage modification complaints.

Looking to the future, with more and more scrutiny coming down on the lending industry there is a chance changes could happen across the country that would benefit struggling homeowners in terms of being able to obtain a permanent loan modification.

However, it’s also important to keep in mind that even though this news focuses on some of the issues that have risen from homeowners trying to obtain a modification, it’s important to remember that even though the process can be somewhat complicated, for some it is still possible to obtain lower monthly mortgage payments. And, in cases where a modification is not made available to a homeowner, there are still other options to help with financial problems that may be impeding on a person’s ability to make house payments on time.

Source: Boston Globe, “Court says lender must face suit over loan modifications,” Jennifer B. McKim, 7 July 2011

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