Foreclosures in Boston by Biggest Banks Brought to Court

by Peter Vernon on cities

Foreclosures in Boston by Bank of America and Wells Fargo, two of the biggest banks in the country, have been brought to court by a number of homeowners in the city.

With the rising number of distressed borrowers also expressing their intentions to sue their lenders, some groups have been planning to file a class-action lawsuit against mortgage banks.

In their lawsuits, the plaintiffs are accusing Bank of America and Wells Fargo for not complying with the provisions of the federal Home Affordable Modification Program which they agreed to carry out as recipients of billions in bailout money from the Troubled Asset Relief Program fund.

According to HAMP provisions, BofA, Wells Fargo and other mortgage lenders and servicers that received TARP money are called to modify the mortgages of borrowers to make them affordable. The housing meltdown and the recession that followed pushed down home values, closed businesses and eliminated jobs, making homeowners unable to make their monthly mortgage payments. The situation was even worse for borrowers who were given adjustable-rate mortgage loans with hidden schedules to adjust to much higher rates.

Additional rules were also issued by the Treasury Department, requiring lenders to streamline the loan modification process and accommodate more distressed borrowers. The three-month trial period was implemented to smooth the transition, after which faithfully-paying borrowers will enter permanent modification status.

However, according to homeowners, foreclosures in Boston and other Massachusetts foreclosures were not being addressed by the big banks. They claimed that Wells Fargo and BofA, which both signed to implement the HAMP provisions when they accepted TARP money, were not doing their part.

According to Roxbury homeowner Germano DePina, one of the complainants, he has been paying his modified monthly loan payments to America’s Servicing Co., the lending unit of Wells Fargo, since September last year, but he has not yet received a reply from the bank for his application for permanent modification.

Based on Treasury Department records, only two percent of Wells Fargo home loans have been moved to permanent modification status.

Another Boston homeowner, Roberta Frugoli, also sued Wells Fargo after she lost her house to entities looking to purchase foreclosure homes for sale. Frugoli has asked the judge to invalidate the foreclosure sale.

According to lawyer Josef Culik, who is helping Frugoli, foreclosures in Boston continue to occur because the lenders are not doing what they have agreed to carry out under the HAMP initiative.

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