The Ninth Circuit recently issued an Opinion in Compton v. Countrywide Financial Corp. et al., (11-cv-00198 Aug. 4, 2014) that overturns a decision issued by the U.S. District Court for the District of Hawaii on a mortgage loan modification-related case.
Describing the homeowner’s experience in applying for a loan modification from BAC (now Bank of America) as a “20 month Kaffka-esque nightmare”, the Court determined Bank of America intentionally frustrated the homeowner’s efforts, gave misleading and erroneous advise while imposing a never-ending list of new requirements, and began the foreclosure process while assuring the Plaintiff no foreclosure would take place. Using that information, the Ninth Circuit overturned the U.S. District Court in Hawaii which found that, despite these allegations, the homeowners did not have a claim against the bank under HRS § 480-2 prohibiting Unfair and Deceptive Acts and Practices (UDAP).
The Ninth Circuit found that the homeowner had alleged sufficient facts for a claim against the bank under Hawaii’s unfair and deceptive practices act. Notably, the Court found that the prolonged loan modification negotiations, transaction costs incurred in providing notarized documents and enduring lengthy delays constituted considerable hardship which was sufficient to state a claim of injury that caused damages for the purpose of a UDAP claim.