NYC Legal Aid Files Class Action Alleging Servicer Spuriously Denied Access To HAMP; Feds Named For Failure To Provide Appeals Process For Rejections

The Legal Aid Society in New York City announced:

• Four homeowners from Queens and Brooklyn, who are at risk of losing their homes to foreclosure, [...] filed a federal class action lawsuit, charging that Aurora Loan Services, their mortgage servicer, has denied them access to the Obama Administration’s Home Affordable Modification Program (HAMP) for spurious reasons, and has failed to provide them with notice so they may contest such denials.(1)

• The lawsuit, Edwards et al v. Aurora Loan Services, LLC et al filed in the United States District Court for the District of Columbia, is one of the first lawsuits to challenge a mortgage servicer for breach of contract by failing to review mortgage loans of eligible homeowners for HAMP and to provide a procedure to contest denial. As the economic crisis places record numbers of homeowners at risk of losing their homes, the lawsuit contends that the named plaintiffs have been denied their rights under the program.

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• The lawsuit, [...] seeks class action status and requests a preliminary and permanent injunction, preventing Aurora from engaging in all unjust and unreasonable practices. It also requests that the Court order Aurora to provide a meaningful notice of HAMP denial, the specific grounds for denial and a process to challenge such denials.(2)

For the entire press release, see Civil Practice Files Law Suit to Help Homeowners At Risk of Losing Homes to Foreclosure.

(1) The lawsuit also names federal officials including The United States Treasury and the Federal National Mortgage Association because of their failure to ensure that homeowners are afforded their full due process rights. The four homeowners are represented by The Legal Aid Society in New York City. Lawyers handling the case include Oda Friedheim, Scott Rosenberg and Judith Goldiner.

(2) A lawsuit filed in July [see Williams, et al. v. Geithner, et al.] by the Foreclosure Relief Law Project, a program of the Housing Preservation Project, alleging a failure to create an appeals process when loan servicers deny access to HAMP loan modifications was recently dismissed by a Minnesota Federal Court. See:

• The Wall Street Journal: Minnesota Judge Delivers Setback to Struggling Homeowners,
• Order denying Plaintiffs' Motion for Preliminary Injunction,
• For more information on the Minnesota lawsuit or to read the filed documents, click here.

For an earlier post on the Minnesota suit, see Minnesota Suit Seeks To Slam Brakes On Foreclosures Until Feds Implement Better Procedures In Program Borrowers Claim Violates Due Process Rights.