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BOA Defeats Class Certification in HAMP Case…is it Over for Homeowners? Or Just Beginning?

September 5, 2013 3 comments

It’s no secret that eyes watching the foreclosure crisis have been watching the class action against Bank of America (BOA) in Massachusetts for some time now.  Today, the Court declined to certify the class, and what that means to us is not what many may think.

It does not mean that the Court ruled the homeowners claims are without merit.  It means that the Court said the homeowners claims do not meet the class action criteria.  Long story short the claims have to contain numerosity, commonality, typicality, and adequacy.  I used to practice in class actions and I can tell you the courts have gotten extremely stringent on what they allow to become certified class-wise.  Do I agree that the HAMP class didn’t meet the criteria?  No.  But these days it would take 22 sets of identical twins, all suffering the same injury at the same time by the same person under the same weather conditions to potentially meet it.  If one-half the sets of twins are under partly cloudy skies and the others under mostly cloudy skies then forget it.  That is how bad it has gotten.  And the famous Walmart case didn’t help things.

Class actions have their pros and cons always.  The upside is usually that people who cannot afford representation can be represented, the cases are massive and we obtain lots of information that we normally would not get from the other side.  The down side is if you are just part of a class you can end up with a lot less than you think.  I’ve been the associate calling people to tell them all they were getting was a magazine subscription for a year after they sued the company.  Not pretty.

But all hope is not lost.  What BOA has been relying on is that there is no private right of action for a homeowner to sue under HAMP, that HAMP was between them and the government, and the homeowner is not a third party beneficiary entitled to sue under it.  But that isn’t what the Court said, and basically we are left with a ruling that says the claims cannot be resolved as a class but can be resolved individually.

The Judge in the HAMP stated that the “Plaintiffs have plausibly alleged that Bank of America utterly failed to administer its HAMP modifications in a timely and efficient way; that in many cases it lost documents, or pretended it had not received them, or arbitrarily denied permanent modifications…Plaintiffs’ claims may well be meritorious….”

So before BOA gets too excited, I’d think long and hard about that.  Individual cases before juries?  Some with punitive damage claims?  Ouch.  Jurors are often more than ready to teach a big corporation a lesson.  Imagine tens of thousands of those cases.  I’m seeing more and more every day.

I think it is safe to say we have all learned a lot from this case.  From the BOA whistleblower affidavits to the Court’s ruling, the information will be used in courtrooms nationwide.  We’ve already seen Judges forcing modifications.  After how much money BOA took from the government and what their own employees state they did with that money while homeowners were suffering damages as a result, there is little doubt this has only just begun.

http://finance.yahoo.com/news/bank-america-defeats-class-certification-140828605.html