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District judge denies major mortgage class action lawsuit

Pennsylvania homeowners who thought that they might get some relief from their foreclosure troubles may be disappointed following news of a recent lawsuit that was prohibited by a judge. The lawsuit alleged that Bank of America Corp went back on its obligations to assist homeowners who needed mortgage modifications and that many of the homeowners were foreclosed on as a result. The U.S. District Court judge hearing the case argued that the claims varied too much for inclusion in a nationwide class action suit.

Legal experts involved with the case say that this is a major setback, pointing out that many of the plaintiffs lack the resources to seek justice individually. In total, 43 parties representing citizens from over half of the U.S. states were listed as plaintiffs.

The suit maintained that the bank did not do its part to comply with the Home Affordable Modification Program. Former bank employees made sworn statements to the effect that the bank actively delayed HAMP applications and lied about throwing out backlogged documents. Some experts say that the ruling reflected a 2011 Supreme Court case that put more roadblocks in the way of people who wanted to initiate class action suits against firms. The attorneys involved in the case plan to appeal the decision.

Homeowners who suffer at the hands of banks and loan holders often find it extremely difficult to gain justice after being treated unfairly. Even though these individuals jump through many hoops in order to submit relief applications and follow loan modification procedures, they often end up losing property or being forced into serious debt. Attorneys may be able to help these borrowers pursue alternative actions, such as filing for Chapter 7 bankruptcy.

Source: Reuters, “UPDATE 3-U.S. judge rejects BofA mortgage modification class action“, September 05, 2013

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