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Tue, 21 Jun 2011 03:12:45 PM

Fannie Mae Home Loan Modification Suit Dismissed by Judge


A lawsuit brought by a group of unhappy New York homeowners against Fannie Mae, the U.S. Department of the Treasury and a private mortgage servicer over the HAMP (Home Affordable Modification)program, has been dismissed by Judge Barbara Rothstein in the US District Court for the District of Columbia. The homeowners suit claimed their access and consideration to the program were unlawfully denied by all parties involved and this was a violation of their rights.

Judge Rothstein wrote in her opinion that she “..sympathizes with the plaintiff frustrations in navigating (or attempting to navigate) a system rife with contradictions, non-responsiveness, and inefficiency..” She also wrote that no one is given an automatic guarantee of acceptance into the federally funded HAMP program and that not every type of frustration is enforceable in court.

The mortgage company involved in this suit, Aurora Mortgage LLC, partnered with Fannie Mae as a HAMP provider and was given an incentive as were other companies administering the program. Plaintiffs also alleged their applications were mismanaged by Aurora and the company failed to communicate at all in some instances regarding the loan modification process, as well as providing bad information.

The Legal Aid Society in New York and New York’s Fitzpatrick, Cella Harper & Scinto represented the Plaintiffs in this suit. Judge Rothstein’s decision that the homeowners lacked standing to sue as they were not considered third party beneficiaries to HAMP contracts was based on on similar decisions in approximately 8 other states.

The Home Affordable Modification Program (HAMP) was created in an attempt to assist as many as 3 to 4 million homeowners experiencing financial woes. The program endeavors to help homeowners avoid foreclosure by modifying loans to a more affordable level for borrowers now, creating sustainability for the future.

The HAMP program uses the following criteria to determine eligibility:

  •  A borrower is late on their mortgage or faces high potential risk of foreclosure
  •  A property is considered the borrower's primary residence
  •  Applicant/borrowers mortgage was originated on or before Jan. 1, 2009 and unpaid principal balance cannot begreater than $729,750 for one-unit properties.

 

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