The wave of HAMP litigation continues to shift as new theories are struck down by the courts. In what should serve as a final blow to the original challenges, the district court in Edwards v. Aurora Loan Services, LLC issued a thorough decision dismissing plaintiffs’ claims for breach of the Servicer Participation Agreement (“SPA”), breach of the implied covenant of good faith and fair dealing based on the SPA, and due process violations. See 2011 U.S. Dist. LEXIS 62462 (D.D.C. June 14, 2011) (concluding that that “the significant discretion built into the Aurora SPA and the HAMP Guidelines precludes a finding that plaintiffs could have reasonably relied on receiving a loan modification”).
Cases continue to be filed pursuing the theory that the initial version of the HAMP Trial Period Plan (“TPP”) qualifies as a contract. “A contract for what?” remains an open question, even under the theories advanced, but some of the formulations by plaintiffs would require that the servicer guarantee a permanent modification based only the borrower’s submission of the required documentation and the trial payment. Almost all of the plaintiffs entered into trial plans under unverified statedincome programs at the outset of HAMP, and with a TPP notice no longer in use. But even as to these TPPs, courts have reached a very different conclusion about whether or not plaintiffs’ claims can survive a motion to dismiss, with a majority now concluding that the plaintiffs do not allege viable theories for breach of contract, unfair practices, or misrepresentation. See, e.g., Morales v. Chase Home Finance LLC, 2011 U.S. Dist. LEXIS 49698 (N.D. Cal. Apr. 11, 2011); Wigod v. Wells Fargo Bank, N.A., 2011 U.S. Dist. LEXIS 7314 (N.D. Ill. Jan. 25, 2011); Senter v. JPMorgan Chase Bank, N.A., Case. No. 11-60308-WPD (S.D. Fla. August 9, 2011).
Dismissals are now on appeal in the Seventh and Ninth Circuits. The pace of filings has led to renewed MDL attempts in cases involving Chase and Citi, which will be heard this September by the JPML. There are also a number of cases in the HAMP litigation that actually pertain to non- HAMP repayment and forbearance plans or alternative programs, which involve different documentation, protocols, and conditions from HAMP.