Homeowners Complain About Loan-Modification Abuses

Monday, 17 Oct 2011 11:27 AM

By Greg McDonald

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Property owners across the United Sates are being assessed unfair fees or having to deal with threatened foreclosures even after signing lower mortgage agreements with their lenders, according to a report Monday in the Boston Globe.
 
The Globe reported that at least eight lawsuits, including two from Massachusetts, have been filed against Bank of America alleging that it violated loan-modification contracts by threatening foreclosure, attempting to collect undue payments or fees, and damaging credit reports. The paper said other mortgage holders are expected to join in a class-action suit.
 
The Globe reported similar problems across the country with other lenders, noting an ongoing investigation by a group of state attorneys general into complaints about loan-modification programs that have turned into nightmares for some homeowners.
 
Massachusetts Attorney General Martha Coakley told the Globe she is not confident that negotiations with the lenders to correct the problems will succeed and is considering legal action against some lenders in the state.
 
Kathleen Day, spokeswoman for the nonprofit Center for Responsible Lending based in North Carolina, told the Globe it has become “all too common for banks to enter a loan mod and then try to foreclose on people and try to harangue them for money.”
 
“All the evidence shows that servicing procedures and record keeping are just a mess. It ranges from disarray to out-and-out fraud,” she said.

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