BofA Argues Against Class-Action Loan Modification Suit

Bank of America Corp. asked a federal judge to reject homeowners’ effort to sue the bank over its failure to modify mortgage loans as a class-action case.

The second-biggest U.S. lender by assets today urged U.S. District Judge Rya Zobel in Boston to deny the borrowers’ request to pursue the case as a group, which would give them greater leverage in the litigation.

“What was brought as a series of lawsuits has been reduced to desperate attempts to seek certification by any means,” Bank of America lawyer James W. McGarry told the judge, referring to certifying the case as a class action.

Bank of America, based in Charlotte, North Carolina, is being sued by homeowners who claim the company didn’t comply with a government program aimed at modifying mortgage loans called the Home Affordable Modification Program.

The borrowers claim the bank first granted temporary modifications, then ordered employees to stall, lie to customers and falsify documents. They cite statements in court documents by former Bank of America employees who said they were rewarded with cash bonuses and gift cards for sending applicants into foreclosure.

“We can prove the bank had a companywide plan to delay the decision because they didn’t want to grant these modifications,” Steve Berman of the law firm Hagens Berman Sobol Shapiro LLP told the judge.

The homeowners claim they made the required payments under the program and didn’t receive permanent modifications. Experts for the borrowers estimate that 300,000 would qualify for the proposed class, Berman said.

McGarry argued the case is unsuitable for a class action. He said borrowers’ responses to Bank of America’s requests for documentation of income and employment varied widely and require individual cases.

The case is In Re Bank of America Home Affordable Modification Program (HAMP) Contract Litigation, 10-md-02193, U.S. District Court, District of Massachusetts (Boston).

To contact the reporters on this story: Janelle Lawrence in federal court in Boston at jmlawrence@me.com; David McLaughlin in New York at dmclaughlin9@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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