Friday, January 07, 2011

Big Bear Homeowner Scores Small Claims Win Over BofA In Alleged Fraudulent Bait & Switch Loan Modification Scam

In Big Bear City, California, BigBearGrizzly.net reports:
  • Dave Graham got fighting mad. The Big Bear City resident took Bank of America’s mortgage division, BAC Home Loans Servicing LP, to small claims court claiming fraud. Graham won his case Dec. 17. And he doesn’t feel apprehensive about gloating one bit.“I feel real good about this,” Graham says. He sued the mega bank for fraud because he was put into a loan modification program by Bank of America when the bank knew from the start he did not qualify.

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  • The judge awarded Graham $7,595. This is the first known case where Bank of America has been found guilty by reason of fraud.

For more, see Big Bear bank shot (Local man wins lawsuit against Bank of America).

See also The Huffington Post: Homeowner Beats Bank Of America In Small Claims Court:

  • Graham, who faces reduced income after retiring from his job as a shift foreman at a grocery distribution center, said he never would have bothered with HAMP had the bank not sent him a packet saying he should apply. "I would have found some way to [make my payments] if I had to," he said. "It may even been that we'd have fallen behind a month or two. I certainly wouldn't have been in this sort of shape."

  • It's the classic HAMP bait-and-switch: Homeowners are told they're eligible for the program but eventually discover the foreclosure process, triggered by the reduced payments, moved faster than the modification process.

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  • Lots of people have sued big banks for their bad faith HAMP efforts, but Graham may be the first to try it in small claims court. It won't save his home, but it gives him some dignity. "Both small claims courts judges and juries often have a refreshing sense of justice that allows these sorts of bellwether decisions," HAMP expert Alan White told HuffPost. "Judges are also less reticent to denounce unfair practices in small stakes individual cases than in government enforcement or class actions."

  • The National Consumer Law Center is involved in several class-action lawsuits against banks and others over broken HAMP promises.(1) (Those lawsuits, if successful, will prevent foreclosures.) The NCLC's Charles Delbaum told HuffPost that Judge John Pacheco's "terrific decision" in Graham's case picked up on the same theme of more than a dozen actions against the likes of Bank of America, JPMorgan Chase, Wells Fargo, and CitiMortgage.

  • "[I]t is unconscionable to string homeowners along far beyond the three month trial periods they and their banks have agreed to," Delbaum emailed, "allowing them to become more and more behind on the payments due under their original loan, making the hole they are in ever deeper and harder to dig out of, and then to tell them they weren't eligibile for the program in the first place -- something the banks are required to determine within the three month trial period."

(1) For some of those lawsuits, see:

posted by Home Equity Theft Reporter at 4:00 AM