Massive consumer victory upholds claims that BOA’s HAMP mortgage-modification program was a RICO enterprise

The nation’s seconds largest banking institution, Bank of America must face a class action lawsuit over RICO and promissory estoppel claims for conspiring to obstruct, delay and deny their Home Affordable Modification Program (HAMP) applications.

The homeowners are represented by Hagens Berman law firm who filed a 2013 lawsuit, claiming that Bank of America and third-party administrators including Urban Lending Solutions created and headed a racketeering enterprise by routinely lying to borrowers, denying they had received HAMP application documents that they had in fact received, as proven by FedEx tracking numbers, in order to mislead homeowners about the status of their applications.

According to the complaint, Bank of America’s failure to grant loan modifications was not merely the result of honest mistakes or even widespread incompetence, but a deliberate and coordinated plan orchestrated by the bank.

The lawsuit was then dismissed by a federal judge, but the 10th Circuit Court of Appeals revived them Monday.

According to the plaintiffs, the complaint states that Bank of America repeatedly lied to homeowners and masterminded a scheme to systematically fail to grant loan modifications in a deliberate and coordinated plan orchestrated by the bank. The lawsuit alleges that while BOA promised it would work with homeowners to modify their mortgages under the HAMP program in return for the bailout funds, the bank instead fought to avoid granting modifications.

Former employees, according to the complaint, have confirmed that Bank of America instructed its employees to delay modifications, assert that it had not received paperwork and payments when it had received them, and declined modifications en masse in periods known internally as “blitzes.”

One of the judges from the three-judge panel, Judge Nancy Moritz said,

“According to the plaintiffs, the enterprise’s dilatory tactics and wrongful denial of HAMP loan modifications defrauded borrowers of money. The plaintiffs specifically allege BOA profited from the fraud by improperly charging fees associated with delinquent loans and by ‘push[ing] homeowners into in-house modifications’ that carried higher interest rates than those associated with HAMP loan modifications.”

“The language in BOA’s [trial period plan, or TPP] documents clearly and unambiguously promises to provide permanent HAMP loan modifications to borrowers who comply with the terms of their TPPs. And this is true regardless of whether those TPP documents state that promise inversely – i.e., that if the borrowers fail to comply with TPP terms, BOA will not modify the loan,” the judge wrote.

Steve Berman, managing partner of Hagens Berman had issued this statement;

“We are more than pleased the court has ruled our complaint has sufficiently alleged that Bank of America’s massive HAMP mortgage-modification program was in fact a RICO enterprise. For years, we have tirelessly fought this major Wall Street kingpin to right the wrongs it committed against hundreds of thousands of homeowners and taxpayers who footed the $45 billion government bailout BOA took in, only to have it used to propagate a scheme to squeeze every dollar from BOA customers and wrongfully foreclose thousands of homes in the process.”

DEFENDANT NAME: Bank of America
COURT: U.S. District Court of Colorado
PRACTICE AREA: Consumer Rights, Racketeering
STATUS: Active
DATE FILED: 07/10/13
RELATED DOCUMENTS: Appeals Court Order 08/15/16