Lawsuits Canvas Top Mortgage Lenders
Class action lawsuits are popping up across the nation, not a surprise to many. Law firms are announcing their formation of sub-prime lending task forces and teams.
The top players in the mortgage service industry all face litigation: Bank of America, Wells Fargo & Co., JP Morgan Chase & Co. and Citigroup Inc. In total 195 servicers are being called to litigation.
When President Obama announced the Home Affordable Modification Program in March, we were told it would help up to 4 million homeowners avoid foreclosure. To date only 15% of eligible homeowners have been offered assistance under HAMP. Some loan servicers have not modified a single loan. These companies include American Home Mortgage Servicing and National City Bank. These smaller players which specialize in servicing riskier sub-prime loans and loans already in default, face accusations of abusing borrowers. Abuses range from harassment to illegal fees and late charges.
Gary Klein, a Boston attorney, has filed lawsuits against two major lenders claiming they knew or should have known their mortgage loans, which increase payments over time, were not affordable to borrowers. In a statement Klein said, “The banks created these toxic products by pushing loans to homeowners and hiding the details in complicated small print”.
Banks not only pushed sub-prime loans, hid complicated details but also ultimately approved these borrowers for loans they could not afford while always knowing the adjustable rate would eventually price them out of their homes.
The success of these lawsuits could provide strength to advocates and litigators struggling to make lenders accountable for the ‘ toxic’ mortgage loans that have pushed millions of Americans into foreclosure.
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