SEVENTH CIRCUIT: Homeowners May Enforce Rights Under Home Affordable Modification Program ("HAMP") Trial Plan Agreements Court revives consumer class against Wells Fargo Bank, N.A.
CHICAGO, March 8, 2012 /PRNewswire/ -- In a landmark decision that promises hope for millions of distressed homeowners across the Country, the United States Court of Appeals for the Seventh Circuit has held that borrowers have enforceable rights under their Home Affordable Modification Program ("HAMP") Trial Plan Agreements. Wigod v. Wells Fargo Bank, N.A. Appeal No. 11-1423 (7th Cir. Mar. 7, 2012).
Reversing the dismissal of a putative class action complaint challenging Wells Fargo's HAMP modifications, the Court found that Plaintiff Lori Wigod – a Chicago homeowner who had alleged that Wells Fargo breached her HAMP Trial Plan despite her full compliance with its terms – could proceed on her claims for breach of contract and promissory estoppel. In the words of the Court, "In short, Wells Fargo's interpretation of the [Trial Plan] turns an otherwise straightforward offer into an illusion." The Court further upheld Wigod's claims for statutory and common law fraud against the bank, stating "Wigod alleges that Wells Fargo made and broke promises of permanent modifications to her and to thousands of other potential class members as well. If true, such a widespread pattern of deception could reasonably be considered a scheme under Illinois law and thus actionable as promissory fraud."
Although over 80 lawsuits had been filed nationwide challenging the HAMP modification practices of several major banks, relatively few had made it beyond the pleadings, with District Courts dismissing cases in light of the HAMP's lack of a private right of action. The Wigod panel rejected such arguments, finding that no "end run" theory prohibited the claims and that Wigod's claims were not preempted.
"This is an incredibly important decision for homeowners who have been subjected to Wells Fargo's home loan modification abuses," said attorney Steven L. Woodrow of Edelson McGuire LLC, who represents the Plaintiff/Appellant, Lori Wigod. "For tens of thousands of homeowners like Ms. Wigod it's been nothing but a nightmare of lost paperwork, endless hours on the phone with the bank, inconsistent explanations, and, ultimately, unjustified denials followed by threats of foreclosure," he said. "The Court should be commended for standing up for the rights of borrowers."
Woodrow is the Chair of Edelson McGuire's Banking and Financial Services Practice Group.
The Court itself acknowledged the far-ranging impact of its decision. As expressed in the concurring opinion of Senior Circuit Judge Kenneth Ripple, "Prompt resolution of this matter is necessary not only for the good of the litigants but for the good of the Country."
About Edelson McGuire: Edelson McGuire is a national law firm focusing on plaintiff's class action litigation and providing strategic and legal advice to start-ups. Its attorneys have testified before the United States Senate on class action issues and have been asked to work on federal and state legislation and policy issues involving banking, cellular telephony and consumer privacy. Their plaintiffs'-side cases and settlements have been collectively valued over one billion dollars and have changed the consumer protection policies of numerous industries. More information on the firm can be found at www.edelson.com.
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SOURCE Edelson McGuire