Boston Lawyer’s Suit Over Unaffordable Loans Could Be a Model
A Boston lawyer’s suit targeting two large mortgage companies accused of making unaffordable loans could spur similar suits throughout the country.
Gary Klein, of the law firm Roddy, Klein and Ryan, filed suit against Bank of America Home Mortgage and Wells Fargo Home Mortgage in federal court in June and July, the Boston Globe reports. He claims the lenders’ “payment option” mortgages grew larger over time, and the companies knew or should have known that borrowers wouldn’t be able to afford them. He is seeking class-action status.
Suffolk University law professor Kathleen Engel told the Globe that other lawyers will be watching the litigation. “If this case goes forward, it will be a model throughout the country,’’ she said.
The suits are based on a 2008 decision by the state’s highest court that upheld the state attorney general’s arguments that lenders violated state law by making loans that were almost certain to lead to foreclosure. Engel told the newspaper that the case was the first in the country to hold lenders accountable for mortgage terms that are legal on their face, but unfair in practice. The decision “should put lenders on edge,’’ Engel said.
Bank of America said Klein’s suit is without merit, while Wells Fargo declined comment.
