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Sixth Circuit Rejects Claims Challenging Loan Securitization and Denial of HAMP Loan Modification


babc.com | December 23, 2014

On Friday, December 5, 2014, the United States Court of Appeals for the Sixth Circuit recently issued its decision in Thompson v. Bank of America, et al., --- F.3d ---, No. 14-5561, 2014 WL 6844931, a case involving various statutory, tort, and contractual challenges to the securitization of a mortgage loan and the denial of a loan modification under the Home Affordable Modification Program (“HAMP”). In an opinion designated for publication, the Sixth Circuit affirmed the district court’s dismissal of the lawsuit, holding that the borrower did not state any claim for relief.

The Sixth Circuit used its comprehensive opinion in Thompson to address and reject so-called “securitization” and HAMP claims that borrowers have increasingly asserted in the past few years. The Sixth Circuit addressed the theories “in detail” to “assist the district courts in addressing this wave of creative litigation.”

Here are a few key aspects of the Court’s ruling:

First , the Sixth Circuit rejected the borrower’s “argument that the securitization of her mortgage note altered her obligations under the note.” The court emphasized that “Federal law provides for the creation of mortgage-related securities” and “[t]he pooling of mortgages into investment trusts is not some sort of illicit scheme that taints the underlying debt.” It also unequivocally held that the “[s]ecuritization of a note does not alter the borrower’s obligation to repay the loan” because “[s]ecuritization is a separate contract, distinct from the borrower’s debt obligations under note.” The court further reaffirmed the propriety of using Mortgage Electronic Registration Systems, Inc. (“MERS”) in the transfer of mortgage notes.

Second, the Court rejected the borrower’s various claims that Bank of America made misrepresentations to her during the loan modification process under HAMP. Although the court “sympathize[d] with” the borrower’s alleged “inability to procure a payment modification,” the Court rejected her fraud/misrepresentation claims. Even “accepting as true Thompson’s allegations that [Bank of America] stonewalled her during the modification application process,” the Court held that this alleged “conduct does not support a claim for negligent or intentional misrepresentation.”

Finally , the Sixth Circuit rejected the borrower’s claim under the Equal Credit Opportunity Act (“ECOA”), holding as a matter of first impression in the Sixth Circuit that an alleged refusal to modify the borrower’s loan under HAMP does not constitute an “adverse action” under the ECOA.

Bradley Arant Boult Cummings LLP represented Bank of America in the district court and in the Sixth Circuit. If you have any questions, please contact Edmund Sauer or Frankie Spero.


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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