Tuesday, July 28, 2009

HAMP Class Action Lawsuit


The Housing Preservation Project, a public interest law firm in St. Paul Minnesota, filed a class action lawsuit in Minnesota federal district court today alleging that the federal government's loan modification program violates Constitutional procedural due process requirements. Pursuant to its press release, the " lawsuit alleges that the program fails to provide homeowners with proper notice and a right to appeal decisions by loan servicers administering the program." The lawsuit seeks to enjoin Minnesota mortgage foreclosures until the government promulgates the necessary procedures to ensure HAMP fair administration.

The lawsuit is reportedly "modeled after similar lawsuits filed in the early 1980s, which sought and successfully stopped all farm foreclosures until the government ensured that the farmers’ procedural due process rights were not violated when administering a similar foreclosure prevention program." Count one of the complaint alleges that the failure to promulgate rules requiring servicers to provide notice of denial under HAMP is a violation of the fifth amendment's protection of procedural due process and alleges that there has been a lack of promulgated regulations, guidelines, and rules for servicers. Count two alleges that the failure to promulgate rules requiring servicers to provide a right to appeal is a violation of procedural due process. A memorandum in support of the motion for a preliminary injunction was filed.
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