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A Boston federal judge has ruled that homeowners may sue a bank under Massachusetts’ consumer protection law, which offers possible triple damages, for violating the U.S. Department of the Treasury’s Home Affordable Modification Program (HAMP) standards. On April 4, District Judge Patti Saris denied a motion to dismiss filed by Bank of America Corp. subsidiary BAC Home Loans Servicing in Morris v. BAC Home Loans Servicing LP. Saris wrote that although HAMP does not provide for a private cause of action, there is a private right of action under the state’s consumer protection law. Russell and Jennifer Morris sued BAC under the consumer protection law for failing to comply with federal HAMP regulations. They also sued Chelmsford, Mass.-based Korde & Associates, a debt collection and foreclosures law firm that BAC hired, for breach of the federal Fair Debt Collection Practices Act. The couple originally filed the case in Essex Superior Court in Massachusetts, but BAC removed it to federal court last September. The Morrises asked for a declaratory judgment that BAC violated the state’s consumer protection law for failing to evaluate them for a loan modification under HAMP, actual damages, costs, and attorney fees and a court order that BAC immediately evaluate them for HAMP. Saris wrote that HAMP violations can give rise to a viable state consumer protection law claim “if the activity would be independently actionable” under the statute. Saris gave the Morrises 30 days to amend their complaint with enough facts to support such a claim. “[A] violation of HAMP that is deceptive or unfair could create a viable claim for relief under [the state law],” Saris wrote. Saris also wrote that while the plaintiffs “have pled sufficient facts to show that BAC violated HAMP,” they…”must plausibly allege that BAC’s actions were unfair or deceptive.” “In this case, plaintiffs have alleged that BAC ignored or failed to evaluate their HAMP application,” Saris wrote. “As factual support for this allegation, they allege only that BAC did not timely provide the appropriate notifications and that BAC sent a non-HAMP modification agreement. Without further factual detail demonstrating unfairness, as opposed to minor delay or trivial clerical flaws, this pleading does not state a claim rising to the level of a [Massachusetts consumer protection law] violation. Saris advised the plaintiffs to amend their complaint to include information their lawyer mentioned in court sessions. “Specifically, he represented that BAC had a history of being non-responsive to the plaintiffs’ efforts to obtain a loan modification, and that a prior such effort had yielded higher monthly payments, an error that BAC made little or no effort to fix,” Saris wrote. Saris also wrote that the Morris case is different from two Eastern District of California cases, ultimately dismissed, involving claims under California’s Unfair Competition Law alleging violations of HAMP. Saris wrote that the court dismissed Aleem v. Bank of America in February 2010 because the California law “cannot create a private right of action where none exists under the federal statute.” Saris called the Massachusetts consumer protection law “a different statutory scheme.” She noted that the California court dismissed Zendejas v. GMAC Wholesale Mortg. Corp. last June “because the plaintiffs pled only that the defendant servicer had not provided them with a loan modification; plaintiffs ‘failed to state facts to show how any of the purported conduct was unlawful, unfair, or fraudulent.’” “The trend in these HAMP cases has been to find in favor of the homeowners, but different theories have different levels of success,” said the Morrises’ lawyer, Josef Culik of Beverly, Mass.-based Culik Law. Claims under the Massachusetts consumer protection law and common law claims “have largely been successful,” Culik said. Many HAMP cases are in California, where decisions have gone both ways, Culik said. Claims like breach of good faith and fair dealing and breach of fiduciary duty have been successful, Culik said. “There are some people who can’t afford their houses, but there are a lot of people who just need a break and need the bank to do what they said [they'd do under HAMP and] evaluate them in good faith for these modifications that provide more money for the investors who own the loans,” Culik said. BAC’s lawyers at Springfield, Mass.-based Bulkley, Richardson and Gelinas did not respond to requests for comment. BAC’s parent BOA has no comment, said spokeswoman Shirley Norton. Michael Stone, a lawyer for Korde at Boston’s Peabody & Arnold declined to comment because his client is not a party to the motion that led to the recent order. According to court papers, the Morrises refinanced their home in Gloucester, Mass., in January 2007 with a $288,000 loan from BOA. BOA sold the mortgage to Fannie Mae, which then tapped BAC to service the loan. The Morrises defaulted in August 2009, and BOA started foreclosure proceedings the same month. BOA tapped Korde & Associates to do its foreclosure legal work. The Morrises claim they sent complete HAMP application packages to BAC in January and February 2010. They claim BAC replied that April with a “non-HAMP modification agreement that did not comply with the HAMP guidelines.” Sheri Qualters can be contacted at [email protected].

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