More details coming out about the HAMP loan modification program.
Under HAMP, the Treasury Department gives mortgage servicers $1,000 incentive payments to reduce borrowers' monthly payments, mostly by cutting interest rates. If an eligible borrower makes his or her reduced payments for three or four months during a trial period, the modification is supposed to become permanent. Often, trials drag on for much longer.
"Rather than allocating adequate resources and working diligently to reduce the number of loans in danger of default by establishing permanent modifications, Bank of America has serially strung out, delayed and otherwise hindered the modification processes that it contractually undertook to facilitate when it accepted billions of dollars from the United States," says the complaint seeking class action filed in July by Teresa Follmer of Mesa, Ariz.
The the interaction between the bank and HAMP.
Bank of America argues that borrowers don't have standing to sue because they aren't parties to the Servicer Participation Agreement between the bank and the Treasury Department. In its motion to dismiss Follmer's suit, Bank of America notes that Treasury has made lots of changes to its "constantly evolving new federal program" and if a borrower is eligible, "the servicer is obligated to consider the borrower for a HAMP modification" -- not necessarily to grant it.
HuffPost reported last week that a Bank of America employee told Troy Taliancich, who has been in a HAMP trial for most of the year, that his modification had stalled because of Treasury's changing rules. "Right now, at this point, the government changed the process a little bit," the employee said. "We changed the procedure and you are one of the homeowners that fell into the middle of when the process changed.Read it all