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US District Court of MA Permits Consumer Protection Complaint against Bank of America to Proceed

The US District Court for the District of Massachusetts has permitted a mortgage-related complaint against certain financial entity defendants to proceed on grounds of negligent misrepresentation, breach of contract, and violation of G.L. c. 93A (the MA consumer protection statute).

In Brown v. Bank of America, N.A. & BAC Home Loans Servicing, LP, Civil Action No. 13-13256-PBS, the pro se Plaintiff alleged that the Defendants engaged in a pattern of delay and misrepresentations that prevented him from modifying his loan and avoiding foreclosure, thereby effectively forcing him to sell his home.  Describing a situation familiar to anyone who has been following the mortgage foreclosure crisis over the past few years, Brown alleged that he attempted to enroll in the homeowners assistance program, HAMP, on the advice of BAC, only to be repeatedly stalled, promised relief in return for payments, and later, falsely, told that his documents had been lost.  “Feeling that foreclosure was inevitable at this point-especially given BAC’s lack of good faith in helping him get a loan modification-Brown sold his home on January 18, 2011.”  After the sale, the Defendants continued to contact and threaten Brown with foreclosure.

In its December 22, 2014 Order addressing the Defendants’ motion to dismiss pursuant to Rule 12(b)(6), the Court determined that the Plaintiff’s allegation of the Defendants’ conduct set out the “kind of systematic delay, misrepresentation, and bureaucratic sandbagging [that] is enough to allege an unfair or deceptive business practice under Chapter 93A,” and that the Plaintiff suffered an economic injury through the increased interest rate he was charged, the loss of the opportunity to refinance, and the forced sale of his home.  The Plaintiff also sufficiently alleged an oral agreement with BAC which would have resulted in the Plaintiff obtaining a HAMP loan modification.  Finally, the Plaintiff sufficiently alleged negligent misrepresentation by the Defendants in their statements that, if the Plaintiff made certain payments, he would get a HAMP loan modification and would be able to keep his home.

While the Defendants raised multiple arguments challenging the Plaintiff’s assertions, the Court stated that those objections would be more appropriate at the summary judgment stage.

Surviving a motion to dismiss is a critical step in the Plaintiff’s challenge to the Defendants’ actions.  Many cases alleging similar facts have failed at this stage, if not before.  We will follow up on this article as the case continues.