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Cleveland: Class-action lawsuits filed against US Bank, Bank of America

7:59 PM, Feb 7, 2011   |    comments
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The lawsuits allege that both have failed to offer permanent loan modifications to eligible homeowners participating in good faith in the Home Affordable Modification Program.

In statements today, attorneys Marc Dann and James Douglass said the banks failed to offer permanent home loan modifications, despite both banks' entering into agreements with these homeowners and accepting federal funds to participate the program.

The class-action lawsuits allege that both banks failed to fulfill obligations under the federal Home Affordable Modification Program.

The lawsuits will ask that the Cuyahoga County Court of Common Pleas accept the cases as class action suits and declare that Bank of America and US Bank are in breach of contract and must offer permanent modifications in accordance with the agreements they have made.

Both Bank of America and US Bank agreed to participate in the HAMP program when they accepted funds from the Federal government as part of the Troubled Asset Relief Program (TARP).

Under HAMP, the banks are to offer permanent affordable loan modifications to participating eligible homeowners that make payments during a three month trial period. The banks receive $1,000 from the government for each HAMP modification.

Parma homeowners Richard and Mary Hlavsa, who have a Bank of America mortgage, and a Cleveland homeowner with a US Bank mortgage, sought help from Dann and Douglass after they entered into agreements with their respective banks to participate in the HAMP program, provided all necessary documentation, made the required payments and were never offered permanent loan modifications.

"Banks like Bank of America and US Bank are not negotiating in good faith. In both of these cases, the bank made written promises to the borrowers that the bank subsequently broke," Dann said.

"In breaking their promises to these homeowners, Bank of America and US Bank are also breaking their promise to the U.S. government and to the taxpayers. The net result for the Hlavsas and the client in the US Bank case is that there is no resolution to the ongoing stress and uncertainty of foreclosure. This is exactly the type of problem the HAMP program was designed to solve."

Dann and Douglass believe that Bank of America and US Bank have failed to keep their promise to many others, in addition to their clients.

"I feel trapped and cheated," said Richard Hlavsa. "I keep paying into this program because I want to keep my home but I have no idea what is happening to my money or if, without a loan modification, I can still lose my house."

The lawsuits further seek that the court order Bank of America and US Bank to properly train those entering into HAMP agreements on their behalf and to pay court costs and fees, as well as actual and punitive damages, to these clients and others like them.

"Bank of America and US Bank are taking advantage of people that are trying to make things right and completely disregarding the promises they made to both these individuals and the government when they took taxpayer money," Douglass said.

"By ignoring their obligation to pull people out of foreclosure, the banks are also standing back and allowing our community to continue to deteriorate.  It must be stopped."

U.S. Bank spokesperson Teri Charest  said, " We are confident thath allegations contained in the complaint are without merit and U.S.Bank will respond to the allegations in court."

Bank of America's Shirley Norton said there was no comment on the lawsuit because the bank has not been served yet.

But she said Bank of America has completed more than 775,000 permanent loan modifications including more than 100,000 through the Federal HAMP program, the most of any servicer.

She claimed the number of Bank of America customers entering HAMP trial modifications each month has more than tripled since the third quarter of last year, exceeding other participating servers. 

WKYC-TV

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