Loan-Mod Lenders Owe Homeowners Thousands

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A home loan modification class action may be forming as a result of banks overcharging homeowners for private mortgage insurance. If you’re a homeowner and modified your mortgage between 2008 and 2011, you may be owed money. Read on for more information.

When the housing crisis hit in 2007 and 2008, millions of Americans were unable to pay their mortgages as housing prices dropped dramatically and foreclosure rates skyrocketed. It was the worst financial crisis since the Great Depression of the 1930s, and as many as 10 million Americans are believed to have lost their homes. 

When the housing crisis hit in 2007 and 2008, millions of Americans were unable to pay their mortgages as housing prices dropped dramatically and foreclosure rates skyrocketed. It was the worst financial crisis since the Great Depression of the 1930s, and as many as 10 million Americans are believed to have lost their homes. 

Many of the big banks improperly calculated home values and overcharged struggling homeowners with unnecessary “private mortgage insurance”.

By 2010, the economy had begun its slow crawl towards recovery, backed by federal programs and government interventions meant to stabilize the market and help struggling Americans regain a sense of financial control. 

Were you overcharged by your lender during the loan modification process?

Many banks and lenders overcharged struggling homeowners. A home value miscalculation forced unnecessary mortgage insurance fees. If your loan modification required private mortgage insurance (PMI), you may be owed thousands of dollars!

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One of these programs, called the Home Affordable Modification Program, or HAMP, was enacted to help people struggling to pay their mortgages avoid foreclosure and stay in their homes by providing an incentive for lenders to modify mortgages. 

It has come to light that some banks and lenders made incorrect calculations during this modification process and overcharged homeowners for private mortgage insurance. This means there are potentially thousands of homeowners who are owed money for the insurance they paid for but did not need. 

A loan modification class action lawsuit may be forming against banks and lenders who incorrectly calculated private mortgage insurance and overcharged homeowners who modified their loan under HAMP.

If you got a loan modification through HAMP with any of the banks or lenders listed below, you may be entitled to compensation. You may have overpaid due to calculation errors on the part of those banks and lenders and are owed money in return. 

The home loan modifications would most likely have taken place in the years 2008, 2009, 2010, and 2011. 

The following banks and lending officers may have made miscalculations in the HAMP mortgage modification process and overcharged homeowners for private mortgage insurance:

  • Ally Financial
  • Bank of America
  • Bank United
  • Bayview Loan Servicing
  • Carrington Mortgage Service
  • Citizens Bank
  • CIT Bank NA
  • CitiMortgage
  • Ditech Financial
  • Greentree Servicing
  • Litton Home Servicing
  • Nationstar Mortgage
  • Navy Federal Credit Union
  • Ocwen Loan Servicing
  • OneWest Bank
  • ORLN Federal Credit Union
  • PennyMac Loan Services
  • PNC Bank
  • Residential Capital
  • Select Portfolio Servicing
  • Specialized Loan Servicing
  • US Bank
  • Wells Fargo Bank

About HAMP & Private Mortgage Insurance

The Home Affordable Modification Program was established in 2009 in order to keep more Americans in their homes by allowing them to modify their mortgages and avoid foreclosure. It was enacted as part of the Emergency Economic Stabilization Act of 2008.

Private mortgage insurance, or PMI, is often required when a homeowner takes out a conventional mortgage (one not backed by the federal government) with a less than 20% down payment. PMI is meant to protect lenders should homeowners fall behind on payments and end up in foreclosure. 

Once a homeowner reaches 20% equity — by either paying down their loan balance over time or through rising home values — PMI can be cancelled and the homeowner no longer needs to pay. Under federal law, lenders must terminate PMI on the date the loan balance is scheduled to reach 78% of the home’s original value. These processes were established under the Homeowner’s Protection Act, or HPA, which went into effect in 1999. 

This potential loan modification class action lawsuit revolves around both HAMP and PMI. The issue involves banks and mortgage lenders and their recalculation of the cancellation date of homeowners’ PMIs. Under HAMP, banks and lenders were required to recalculate the PMI cancellation date using the home’s original value, not the most recent home value which was often much lower due to the housing crisis. 

New evidence suggests that banks and lending institutions recalculated the cancellation date of homeowners’ PMIs based on the most recent home value, extending the cancellation date and forcing homeowners to pay more in PMI than was required by law. 

Homeowners may be entitled to repayment of PMI costs that were miscalculated by the banks and lenders, whether intentionally or unintentionally. 

Chase Bank Agrees to Settle Similar Class Action

In 2015, a New Jersey homeowner filed a class action suit against JP Morgan Chase alleging violations of the Homeowner’s Protection Act and argued that Chase charged homeowners more in PMI premiums than was required. 

The original complaint read in part: 

“This is a class action against defendants JPMorgan Chase & Co … arising out of Defendants’ deceptive and/or unconscionable business practices in connection with the collection and assessment of Private Mortgage Insurance (“PMI”) on residential mortgage transactions or loans which have been modified. Specifically, Chase misrepresents to borrowers the amount of time it can continue charge PMI on modified mortgage loans. Moreover, borrowers deceived by Chase are compelled to pay for unnecessary home valuations such as appraisals or broker price opinions (“BPOs”) if they wish to stop paying PMI to Chase sooner.”

The class action lawsuit alleged several counts against Chase, including violations of the HPA, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, negligent misrepresentation, violations of the New Jersey Consumer Fraud Act, amnd violations of the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act. 

Chase fought against the allegations, and US District Judge Madeline Cox Arleo dismissed plaintiff’s allegations of state law violations. However, the federal claims were upheld and in 2017, Chase agreed to settle those allegations for an undisclosed sum.

The case is FRIED v. JPMORGAN CHASE & CO. et al, 2:15-cv-02512, in the US District Court for the District of New Jersey.

Class Action Lawsuits Now Forming

If you own your home and went through a mortgage modification process under HAMP, you may be entitled to financial compensation in the form of repayment of unnecessary PMI costs. 

Many banks and lending institutions may have miscalculated the cancellation date of homeowners’ private mortgage insurance, resulting in overpayments. 

Loan modification class action lawsuits against these banks—similar to the 2015 class action involving Chase Bank, which the bank agreed to settle for an undisclosed sum—are now forming. Homeowners nationwide who modified their loan under HAMP with one of these banks may be entitled to financial compensation. 

The experienced attorneys at Schmidt National Law Group are prepared to take on these large financial institutions in order to return the money that is rightfully owed to homeowners across the country.

Call 1-800-631-5656 today to speak with one a member of our legal team and see if you qualify for this class action lawsuit. Or visit our website to fill out our online claims form now.

Now accepting claims from homeowners in the following states: 

  • California – CA
  • Florida – FL
  • Alabama – AL
  • New York – NY
  • Illinois – IL
  • New Jersey – NJ
  • Georgia – GA 
  • Arizona – AZ
  • Texas – TX
  • Michigan – MI
  • Maryland – MD
  • Massachusetts – MA
  • Ohio – OH
  • Virginia – VA
  • North Carolina – NC
  • Nevada – NV
  • Colorado – CO
  • Connecticut – CT
  • Tennessee – TN
  • Wisconsin – WI

Sources

https://www.cbsnews.com/news/5-groups-still-recovering-from-the-financial-crisis/

https://www.federalreservehistory.org/essays/subprime_mortgage_crisis

https://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx