Lawsuit Filed Over Loan Mod Denials

By:: Kirk Haverkamp | March 17, 2011

A class action lawsuit has been filed against CitiMortgage in New Jersey, alleging that the lender improperly denied mortgage loan modifications to borrowers while reaping the financial benefits of a federal program meant to provide them.

The suit was filed on behalf of New Jersey homeowners who were denied permanent loan modifications under the Home Affordable Modification Program (HAMP) federal anti-foreclosure initiative. The suit alleges that some homeowners who entered into HAMP trial modifications through CitiMortgage were denied permanent modifications by the company despite making all their trial period payments and otherwise meeting program rules.

The complaint claims the bank accepted billions in funds from the government’s Troubled Asset Relief Fund (TARP) that were designated for helping at-risk borrowers avoid foreclosure. It claims that CitiMortgage and other TARP-funded mortgage servicers are contractually obligated to modify mortgage loans for homeowners who qualify under HAMP guidelines.

The suit claims the bank has dragged its feet on approving loan modifications or denied them entirely, depriving at-risk homeowners of federal assistance that could save them from foreclosure. At the same time, it claims CitiMorgage reaped the financial benefits of participating in the program while also collecting higher fees and interest rates associated with stressed home loans.

Contacted for this story, a CitiMorgage spokesman said the bank believes the suit is without merit and will defend it vigorously.

The suit was filed by the law firm of Berger & Montague, P.C. in U.S. District Court in New Jersey.

Start here to compare mortgage rates from top lenders in our network

Call For Rates

800-419-1494

Speak to a lender now.

We will match calls to our toll free number with our network of lenders.

Modify My Loan

Browse Mortgage Rates

Featured Guides

Browse our comprehensive guides to popular topics related to mortgage and personal finance.

Loan Modification Calculators

Mortgage Loan Directory and Information, LLC or Mortgageloan.com does not offer loans or mortgages. Mortgageloan.com is not a lender or a mortgage broker. Mortgageloan.com is a website that provides information about mortgages and loans and does not offer loans or mortgages directly or indirectly through representatives or agents. We do not engage in direct marketing by phone or email towards consumers. Contact our support if you are suspicious of any fraudulent activities or if you have any questions.

Mortgageloan.com is a news and information service providing editorial content and directory information in the field of mortgages and loans. Mortgageloan.com is not responsible for the accuracy of information or responsible for the accuracy of the rates, APR or loan information posted by brokers, lenders or advertisers.