After the recent economic collapse, a number of homeowners struggled to keep up with their mortgage payments. In response, the federal government established the Home Affordable Modification Program (HAMP) to help homeowners and banks come together to refinance underwater mortgages. The hope was that more people could stay in their homes, which would slow down the devastation following the housing market crash. Many homeowners applied for the program but allegations began surfacing that banks were not cooperating with homeowners as the HAMP requires. Several employees of Bank of America in particular admitted that the bank was purposely “losing” homeowners refinancing paperwork and rewarding employees for pushing loans into foreclosure.

A number of lawsuits were subsequently filed. A group of 26 cases from 19 states, representing homeowners with mortgages through Bank of America, were consolidated by the Judicial Panel on Multidistrict Litigation. This consolidation made the case eligible to become a class action lawsuit. In order to proceed as a class action, the cases must meet several requirements and be approved by a judge. In this case, U.S. District Judge Rya Zobel ruled that the homeowners did not qualify as a class; citing the diversity of both the facts of the individual cases, as well as the conflicting contract laws of the 19 individual states. She concluded, “Plaintiffs’ claims may well be meritorious; but they rest on so many individual factual questions that they cannot sensibly be adjudicated on a classwide basis.”

Although she declined to certify a class action, Judge Zobel was sympathetic to the homeowners’ position, and stated, “This case demonstrates the vast frustration that many Americans have felt over the mismanagement of the HAMP modification process.” Homeowners may still sue Bank of America individually; they simply won’t be able to do so as part of a class action lawsuit.

References

In re Bank of America Home Affordable Modification Program (HAMP) Contract Litigation (2011 WL 2637222) (Civil Action No. 10–md–02193–RWZ, July 6, 2011)

In re Bank of America Home Affordable Modification Program (HAMP) Contract Litigation (2013 WL 4759649) (M.D.L. No. 10–2193–RWZ, Sept. 4, 2013)

Bank of America Mortgage Holders Lose Bid to Sue as Group (http://www.bloomberg.com/news/2013-09-05/bank-of-america-mortgage-holders-lose-bid-to-sue-as-group.html)

Judge Denies Class-Action Request in Massive Bank of America Lawsuit (http://consumerist.com/2013/09/06/judge-denies-class-action-request-in-massive-bank-of-america-lawsuit/)