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Class: B of A Denied HAMP Modifications for Wronged Homeowners

A federal consumer fraud class action was recently filed against Bank of America, accusing the bank of fraud and unfair business practices. The class claims that, far from working to help desperate homeowners through the HAMP mortgage modification program, the banking giant worked to extract fees from them while scheming to take their homes anyway.

Even more troubling, many of the homeowners originally obtained their mortgages through Countrywide, which Bank of America bought when the smaller lender's risky mortgages were going bad. It was later discovered that Countrywide had engaged in predatory lending practices, often against minorities and other vulnerable borrowers.

In other words, many of the alleged victims received unsustainable mortgages through Countrywide, and then asked new-owner Bank of America to modify those mortgages into reasonable rates and terms. Instead of taking responsibility for the Countrywide mortgages, Bank of America allegedly made things worse.

B of A receives federal money to adjust mortgages, never ramps up for the job

The Home Affordable Mortgage Program, or HAMP, was created as part of the 2009 bank bailout. It was meant not only to help homeowners but also to reduce the foreclosure crisis's toll on mortgage lenders and the overall economy by preventing hundreds of thousands of bad and illegal mortgages from sending a further cascade of foreclosures through the markets.

The federal government gave banks and mortgage lenders billions to facilitate the modification of these loans. You might think that homeowners who were victims of predatory lending by Countrywide would have been the first to receive better loans.

Instead, the class action alleges that B of A never bothered to hire or train sufficient staff to run the program, but contracted to a company that tried to handle the problem with poorly trained temps.

B of A keeps homeowners in limbo, then forecloses

Moreover, the complaint states, ""In order to frustrate the borrowers and disguise its fraudulent scheme, Bank of America instructed bank employees to falsely inform scores of borrowers their modification application was either 'under review,' incomplete or simply had not been received.

"These misrepresentations and fraudulent scheme caused scores of borrowers to send and resend their HAMP modification applications over and over under the false impression and hope of saving their home."

They were not saving their homes. We recommend reading the entire story by the Courthouse News Service for more details, including the personal story of one couple who lost their home to Bank of America. The federal class action currently involves homeowners in Florida. It's not yet clear whether similar lawsuits will be filed in Connecticut or other states.

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