It seemed Maria Campusano's financial problems were behind her when the mortgage on her Victorian home in a Massachusetts mill town was chopped by hundreds of dollars a month.
She soon learned that her troubles had just begun.
Weeks after making her first payment under the new rate, the school district staffer began receiving past-due notices, documents showing wildly inaccurate loan balances and letters threatening foreclosure. She now fears she'll lose her home.
"How can they take away what I have worked so hard for?" Campusano said.
Campusano is one of two named plaintiffs in a proposed class-action lawsuit alleging breach of contract by Bank of America NA and subsidiary BAC Home Loans Servicing LP.
The suit, which was filed in Los Angeles federal court because BAC is located in nearby Calabasas, is among a growing number of legal complaints accusing banks of disregarding what should be binding agreements to reduce the monthly mortgage payments of troubled borrowers.
The suits involve permanent modifications through the U.S. Treasury-administered Home Affordable Modification Program, which offers incentives to loan servicers who extend modifications, as well as so-called proprietary modifications, which banks offer independently of the government guidelines.
They represent a new wave of complaints against banks that have already weathered years of criticism for their reluctance to modify loans and for foreclosing on borrowers after offering them trial modifications.
Some have faced lawsuits alleging that the foreclosures amounted to a violation of the deal they struck with the government when they accepted funds from the $700 billion Wall Street rescue. And earlier this month, U.S. Treasury officials announced it was withholding incentives from Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. for incorrectly determining that many borrowers were ineligible for HAMP modifications, a claim that the banks denied.
Recently, though, government officials and mortgage lenders have been touting statistics showing an increase in the number of modifications being extended.
The U.S. Treasury said in its April HAMP report, the most recent, that 70 percent of the trial modifications initiated since June 1, 2010 under the program's guidelines have been made permanent, up from 42 percent for trials started before that date.
Meanwhile, the Hope Now group — an association of large banks, mortgage servicers and others — reported that its members had modified 1.8 million loans in 2010, up from 1.2 million modifications in 2009.
But even as troubled borrowers increasingly manage to pry modification deals from reluctant banks, they're finding that problems persist long after the ink dries on their new loan contracts.
The Connecticut Fair Housing Center looked at 655 mortgage modifications granted in recent years to clients of partner organizations in 10 different states and found that nearly a quarter were having problems with inaccurate balance statements, erroneous default notices and other issues.
Campusano's lawsuit cites remarks from an unidentified former call center worker who said staff received bonuses for collecting more than was due under the modification deals. Attorney Shennan Kavanagh declined to make the worker available, but said the worker would testify or provide a declaration if needed during trial.
However Tracey Seslen, a real estate finance professor at the University of Southern California's Marshall School of Business, said the banks are probably just overwhelmed.
"There's not the kind of manpower for the quality control that's needed to make sure these things don't happen," he said.
Whether the problems are due to clerical errors, lack of oversight or something nefarious, the impact on homeowners is severe.
Julie Lewis, a 53-year-old mother of four, modified her contract with CitiMortgage Inc. for her Staten Island, N.Y. home after getting a divorce and suffering injuries in a car wreck that kept her from working.
In October 2010, after accepting her modified payments for more than a half year, CitiMortgage told her the modification had been denied, according to documents filed as part of a federal lawsuit in New York.
Bank agents now visit her street to take pictures of her home or hang fliers on her doorknob demanding that she call to discuss purportedly late payments.
"The banks act like bullies," said Lewis.
CitiMortgage spokesman Mark Rogers said legal restrictions kept him from discussing Lewis' situation.
Also in Staten Island, Merab Abdaladze and Tamar Bibishvili are having problems getting Chase to recognize a HAMP modification that it made permanent in September 2010.
After accepting the couple's first payment under the modified plan, the bank said the modification was invalid and stopped cashing their checks, according to a motion filed with New York state court. Chase lawyers have since assured the couple's attorney the modification was valid, but the bank still returns their checks uncashed.
Chase spokesman Gary Kishner said he could not comment on pending litigation.
And in the Seattle suburb of Issaquah, Nathaniel and Emily Perrone, both 29, saw a missed payment notice appear erroneously on their account statement soon after BAC approved their permanent modification in October 2010.
BAC customer service staffers have repeatedly assured Nathaniel Perrone that the charge was a mistake, but it remains on the account eight months later, along with late fees.
Bank of America spokeswoman Shirley Norton declined to comment on the cases involving the Perrones or Campusano, who are co-defendants in the proposed class-action lawsuit.
Campusano's problems began when she sought to modify a loan she refinanced years earlier to finish repairs to her Victorian-style home in Lawrence, Mass.
The 44-year-old single mother said she wanted to reduce her housing expenses because she was about to begin repaying a graduate school loan and had recently taken in a niece and nephew after the death of her sister.
Campusano made all of her payments under the modification she was granted in April 2010, but three months later received an account statement that misidentified her mortgage as being an interest-only loan. Over the following months, she was sent bills demanding late fees for payments she never owed.
In November, when she called the bank to ask about letters she received threatening foreclosure, she was told that she was actually ahead on her payments, according to the lawsuit. But the next month, she received four separate foreclosure notices, each giving a different figure as her monthly payment amount.
"I'm a very responsible woman and I don't think it's fair to be treated this way by the bank," she said. "If we signed an agreement, how can I be going through all this?"
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