Phillips & Garcia on Bank of America Loan Modification Class Action

The Boston Globe recently reported that Bank of America  and Wells Fargo were sued in federal court class actions for, in essence, failing to abide by and honor loan modification agreements entered into pursuant to the federal loan modification programs that were funded with taxpayer money.  In our blog "Bank Forecloses Despite Paid-Up Loan Modification Agreement," we first reported Bank of America's long delays in processing loan modifications here, as well as the lack of adequate policies and procedures to prevent collection and foreclosure while loan modification requests are pending with the bank.  We have heard a number of horror stories of loan modification requests pending with Bank of America for many months with no answer.

The loan modification class actions should be a welcome development for homeowners because the discovery process on those cases will give borrowers one of the first looks "under the hood" to see what is actually going on at these banks.  We know the lawyers who filed the cases and they know lending cases.  It is suspected that the employees or servicers processing loan modification requests are under-trained, under-staffed and and over-worked.  We have already been informed that the processing of "short sales" at BOA is a mess, as the processors are inundated with short sale requests and oftentimes cannot even get to loans (i.e. not even open the e-mail correspondence) before the request for a short sale goes stale, which results in a postponement of the sale date and a resubmittal of documentation to the bank.  A very frustrating process which causes buyers sometimes to walk away from the sale.

We will keep track of these class actions and report on any developments here.  In the mean time, please keep reporting your stories of sloppy bank practices and wrongful foreclosures so we can continue to blog about them and inform America about what is going on in the United States of America, Inc.