In this article, we will review the case and examine the recent friend-of-the-court brief filed by AARP, a whistleblower complaint filed by the Attorney General of New York, and CitiMortgage’s violation of HAMP program requirements. In addition, we will discuss the implications of CitiMortgage’s violation of HAMP program requirements for borrowers. But before we discuss the lawsuit, let’s review the latest developments in the foreclosure crisis.
AARP’s friend-of-the-court brief
AARP filed a friend-of-the-court brief in the Home Affordable Modification Program lawsuit in response to CitiMortgage’s failure to act timely in deciding borrowers’ cases. The lawsuit seeks monetary and non-economic relief for individual complainants, as well as a twelve-year Voluntary Compliance Agreement. The agreement also calls for the creation of a modification fund, a thirty million dollar fund for affordable housing, and changes to policies.
The settlement, in this case, included monetary damages and an accessibility modification fund for families using vouchers. The funding was intended to create accessible units in public housing and the private market. It also included changes to the regulations and policies governing home affordability modification programs. In this way, the settlement resolves many of the issues that were alleged in the lawsuit. While DRM and AARP supported the settlement, AARP and other organizations joined the case as Associational Plaintiffs.
Attorney General Schneiderman’s lawsuit
New York Attorney General Eric Schneiderman is filing a lawsuit against four interrelated companies and their principals in the Home Affordable Modification Program (HAMP) scandal. The companies allegedly deceived homeowners by claiming to provide loan modifications while collecting illegal advance fees. In addition, they failed to provide promised loan modifications. The New York Attorney General’s Office has secured a temporary restraining order against the defendants to prohibit them from collecting any more illegal advance fees and freezing the companies’ bank accounts.
The 2012 settlement deal between the state and the banks was widely criticized as ineffective and was forced to be delayed for weeks before addressing complaints. The lawsuits against the banks would be the first legal-enforcement claims made under the settlement deal and could set a precedent for similar lawsuits in other states. Nonetheless, the settlement deal was not perfect, and Schneiderman’s lawsuit is likely to represent the only legal-enforcement claim against the banks under the settlement deal.
Wells Fargo bank whistleblower complaint
Recently, a whistleblower at a Wells Fargo branch in California was forced to leave the bank after discovering that she was opening up to 15 unauthorized credit cards for each customer she worked with. After reporting the fraud to her Human Resources department, she was fired. The bank defended itself by pointing to the fact that she failed to meet her sales goals. But most observers point to sales goal programs as the root cause of the fraud.
Another example is a $75 million bond offering in which Wells Fargo allegedly misled investors. The SEC later charged a senior banker with fraud. Another example involves the bank’s bad mortgage loans – thousands of them went to people who could not afford them. The bank was also fined $3.6 million by the CFPB for its illegal student loan practices. In addition to fines, the bank has agreed to pay restitution to affected students.
CitiMortgage’s violations of HAMP program requirements
In this class action lawsuit, plaintiffs claim that CitiMortgage violated HAMP guidelines by improperly distributing escrow arrearage payments over the life of the loan. The Court holds that this practice violates the Home Affordable Modification Program and is a violation of the California Fair Debt Collection Practices Act. Although CitiMortgage does not deny that it violated the HAMP rules, the violations of HAMP guidelines have a substantial impact on the outcome of the case.
CitiMortgage is required to freeze any foreclosures related to its flawed application process and must notify affected consumers through a letter and bank check. Additionally, CitiMortgage must notify those affected by its violations by mail to avoid further penalties. In addition, CitiMortgage must provide borrowers with clear and complete information regarding the requirements for foreclosure relief and resubmission. The Consumer Financial Protection Bureau (CFPB) has urged other institutions to follow suit in similar circumstances.
