Class Action Alleges Loan Servicer Abused HAMP
A class action filed against Saxon Mortgage alleges that the company uses the Home Affordable Modification Program to lure customers into making "trial" payments on loans it has no intention to modify on a permanent basis. The lawsuit, filed in the U.S. District Court for Northern District of California, alleges that Saxon engaged in a pattern of collecting trial payments, delaying the processing of loan modifications, and then denying the application altogether for demonstrably false reasons. The Complaint in Gaudin v. Saxon Mortgage Services Inc., advances claims for breach of contract, rescission and restitution, and deceptive debt collection practices in violation of California's Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act), as well as fraudulent, unlawful, and unfair business practices under California's unfair competition law.
Several courts have held that HAMP does not create a private right of action or any type of entitlement for borrowers. (See, e.g. Vida v. OneWest Bank, F.S.B., 2010 WL 5148473 (D.Or.2010); Hoffman v. Bank of America, N.A., 2010 WL 2635773 (N.D.Cal.2010)). Trial payments, which are consistent with HAMP, are vital to determine a borrower's willingness and ability to service the loan under the modified terms.
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