Troubled Homeowners Sue Geithner
WASHINGTON (CN) - Aurora Loan Services breached its contract with the federal government by failing to bail out homeowners at risk of defaulting on their mortgages, a class action claims in Federal Court. The class also claims Treasury Secretary Timothy Geithner failed to help them though they qualify under the Obama administration's Home Affordable Modification Program.
Aurora contracted with Fannie Mae under the Home Affordable Modification Program (HAMP), agreeing to modify loans for defaulting borrowers or for people at imminent risk of default.
The program is meant to stem the escalating foreclosure rate and was created as part of the Troubled Asset Relief Program.
The class claims Aurora has refused to evaluate their loans for modification, even when the borrower clearly meets HAMP standards.
Homeowners say that when some borrowers approached Aurora with HAMP requests, it "threatened to institute foreclosure proceedings, offered forbearance agreements that violate the HAMP program guidelines by not lowering [their] monthly payments, required [consumers] to waive substantial legal rights, and [refused] to guarantee a modification even if the [consumer] fully complies with the terms of the forbearance agreement".
Aurora's refusal to help these homeowners, without reason, violates their right to due process, claims the class, which also sued Assistant Treasury Secretary for Financial Stability Henry Allison Jr., Acting Director of the Federal Housing Finance Agency Edward DeMarco, and Fannie Mae.
The claims the federal officials are letting Aurora and other banks off the hook by letting them deny pleas for help without cause and foreclosing on homes - the very thing HAMP was created to prevent.
The class wants Aurora declared in breach of its HAMP contract, and required to offer loan modifications to every class member who qualifies under the program. It wants the government to enforce HAMP regulations, and a procedure established by which homeowners can challenge their denial of loan modifications.
The class is represented by Daniel Press with Chung Press.