However, the institution ranks one of the lowest in the country to approve applications (Wachovia is the lowest on a selective list of HAMP servicers with a rate of 3 percent. CitiMoartgage is the highest with 50 percent).
"We intend to show that Bank of America is acting contrary to the intent and spirit of the TARP (Troubled Assets Relief Program) program, and is doing so out of financial self interest," Steve Berman, managing partner of Hagens Berman, said in a statement. "We contend that Bank of America has made an affirmative decision to slow the loan modification process for reasons that are solely in the bank's financial interests."
Named plaintiff Britta Brewer, like many going through the loan modification process, was foreclosed on after BofA mishandled her case, allegedly on purpose.
Brewer filed for a loan modification when she and her husband's income changed and house payments increased, making it difficult to pay their mortgage on time.
In August of 2009, her lender confirmed that they received her request for assistance via e-mail and letter.
But in September, a realtor approached Brewer, offering to buy her home as part of a short sale because their home was in default. She promptly contacted BofA's foreclosure department, who claimed they did not receive her financial documents. However, the company confirmed that a modification process had been started. The bank's representative Brewer communicated with restarted the loan modification process as a result of the confusion. The next day, the struggling homeowner faxed over the necessary documents.
On October 1, she received a foreclosure notice on her door. She spoke to another representative who said her temporary loan modification was approved and instructed Brewer to make three consecutive, timely payments of $1,977. She did so, but at the end of the three-month period, the bank demanded an immediate payment of $46,000 and claimed that she was not eligible to receive a permanent loan modification.
As a result, her home went into foreclosure.
BofA was contacted for this story, but refused to comment on the pending litigation. However, Rick Simon, spokesperson for BofA's home loans department wrote the following statement:
"Since early last year, Bank of America has made the government's Home Affordable Modification Program (HAMP) the centerpiece of its homeownership retention efforts and considers homeowners with eligible loans for a HAMP modification before looking at other alternatives. For homeowners who do not qualify for HAMP or who fall out of the program, the bank may offer alternative solutions.
"Bank of America has completed more than 650,000 mortgage modifications since the start of 2008 through HAMP and proprietary modification programs and offers. In the first half of 2010, we completed more than 160,000 modifications, including more than 72,000 HAMP modifications, 24 percent more HAMP modifications than any other servicer. Bank of America also leads the industry with more than 310,000 trial modifications started under the HAMP."
Lori Gay, president and CEO of Los Angeles Neighborhood Housing Services (LA NHS) says Brewer's case is nearly identical to that of her own clients. Some of the greatest challenges borrowers are having are the poor or slow response from lenders. She said some lenders even lose paperwork, or make unaffordable loan modification adjustments.