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NEW YORK (Reuters)-Bank of America Corp. has lost its bid to dismiss a lawsuit, accusing him of shirking promises to help borrowers to modify their mortgage loans under a federal program.
The Bank, however, claimed a partial victory, citing the decision by district judge Rya Zobel to dismiss the claims for borrowers who sought to participate in two years, home affordable modification program or HAMP.
Zobel, however, ruled that homeowners who argue that they don't get modifications for which they are qualified under HAMP, to avoid foreclosures, may pursue claims against Bank of America.
The complaint "meticulously" each of these plaintiffs ' compliance with loan terms change details, but said the Bank "willfully failed" to modify loans, in bad faith or for their own economic benefit, Zobel wrote. Such allegations are "enough" to let the lawsuit go forward, he added.
Zobel rejected statements from borrowers who claimed they were "beneficiaries" of HAMP but never entered the program, saying it had no contractual right to relief.
She also rejected a request to block the Bank of America while it is pending to foreclose on borrowers 37 said to be "imminent" in danger of losing their homes.
In a statement, Bank of America spokeswoman Shirley Norton said the company is pleased that four of the eight counts in the complaint were dismissed.
The lawsuit combines 26 cases that were brought in 19 States and the status of class action sought for several plaintiffs.
"Conclusions of the Court will probably hundreds of thousands of families to convert temporary mortgage modification plans to permanently lower monthly payments. Tens of thousands of foreclosures are likely to be prevented, "said Gary Klein, a lawyer for the plaintiffs, adding that he expects the case to get the certification class.
Last week, Bank of America said that it would take 20 billion dollars in expenses for various issues, including mortgage over its purchase of Countrywide Financial Corp. 2008.
How many rivals, the Bank based on Charlotte, North Carolina was also in talks with State and federal regulators to resolve complaints about abuses alleged foreclosure.
HAMP was created in 2009 as a centerpiece of efforts by the Obama administration to increase the housing sector of the nation.
While providing incentives to servicers to encourage loan modifications, HAMP has been widely derided as ineffectual.
Until may, the 731.451 borrowers had received permanent loan modifications, much below the original target of 3 million to 4 million.
The House of representatives, controlled by the Republicans voted in March to wind down the program, if the Senate democratic control should not follow.
Bank of America, JPMorgan Chase and Wells Fargo & Co are the largest servicers participating in HAMP.
The case is In re: Bank of America Home affordable modification program (HAMP) contract litigation, U.s. District Court, district of Massachusetts, no. 10-md-02193.
(Reporting by Jonathan Stempel; editing by Carol Bishopric)
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