Washington Consumer Protection Act

Borrower Files Class Action Against EMC Mortgage Over Loan Modification Practices

On January 10, 2011, a putative class action was filed in the U.S. District Court for the Eastern District of Washington against loan servicer EMC Mortgage Corp. and its parent, Bear Stearns. The action is asserted on behalf of all EMC-serviced mortgagors in the State of Washington who have made payments pursuant to a temporary loan modification plan or repayment agreement while attempting to obtain a permanent loan modification (alleged to number in the “hundreds if not thousands”). It alleges that EMC has acted in bad faith, and engaged in improper accounting, bad recordkeeping, and misrepresentations during loan modification negotiations with mortgagors in the State of Washington. Specifically, the putative class representative alleges that, despite EMC’s repeated promises to modify her and other mortgagors’ loans and their compliance with the modification terms, EMC is improperly delaying permanent modification of the loans while at the same time charging excessive fees, inflating arrearages and continuing to threaten foreclosure. The Complaint alleges violations of the Washington Consumer Protection Act and EMC’s settlement with the Federal Trade Commission, along with claims for breach of contract, breach of the duty of good faith and fair dealing, promissory estoppel, and unjust enrichment. Complaint.