April 22, 2011
In 2008, Congress passed the Home Affordable Modification Program ("HAMP"), created under the Emergency Economic Stabilization Act of 2008 ("EESA"), 12 U.S.C. §§ 5201-5261. To participate in HAMP, companies that service mortgages not owned by a government-sponsored enterprise enter into a contract with Fannie Mae ("HAMP Contract"). HAMP's purpose is to provide eligible homeowners with permanent loan modifications to avoid foreclosures. In a typical HAMP Contract, the company agrees to review all eligible borrowers who apply for a loan modification under HAMP and to provide permanent loan modifications to eligible borrowers who meet the HAMP criteria.
Recently, the U.S. District Court for the Southern District of Florida held that no private right of action exists under HAMP. In Ozoria v. Deutsche Bank Trust Co. Ams., No. 10-24070-Civ, 2011 WL 1303270 (S.D. Fla. Mar. 31, 2011) (available on Westlaw only), the plaintiffs sued GMAC Mortgage, LLC ("GMACM"), their mortgage loan servicer, after they had twice applied for a permanent mortgage modification but GMACM had denied their applications both times. The plaintiffs, claiming to be third-party beneficiaries of the HAMP Contract, alleged that GMACM had breached the Contract when it wrongfully denied their applications for permanent HAMP mortgage loan modification and that it had breached the covenant of good faith and fair dealing when it denied their applications. In dismissing the plaintiffs' breach-of-contract claims (or third-party beneficiary claims) against GMACM, the court emphasized that there is no private right of action under HAMP. The court, pointing out that other courts have held likewise, commented:
Defendants argue that Plaintiffs' Complaint should be dismissed because it only concerns breaches of the HAMP Contract, and HAMP does not provide a private cause of action. Indeed, the courts that have been presented with similar cases have held that HAMP does not confer a private right of action. See, e.g., Nelson v. Bank ofAmerica, N.A., No. 10-00929, 2011 WL 545817, at *1 (M.D.Fla. Feb. 8, 2011); Zoher v. Chase Home Financing, No. 10-14135, 2010 WL 4064798, at *3 (S.D.Fla. Oct.15, 2010) (collecting cases). Neither the HAMP Guidelines nor the EESA expressly provide for a private right of action. Instead, Congress provided that Freddie Mac serve as the compliance officer for HAMP. See U.S. Dep't of Treasury, Supp'l Directive 2009-08, at 4 (Nov. 3, 2009). As the compliance officer, Freddie Mac must conduct "independent compliance assessments," including an "evaluation of borrower eligibility." Supp'l Directive 2009-01, at 25-26. By delegating sole compliance authority to Freddie Mac, and staying silent as to a right of action in district courts, Congress intended that a private right of action was not permitted. Cf. Thompson v. Thompson, 484 U.S. 174, 180, 108 S.Ct. 513, 98 L.Ed.2d 512 (1988) ("The intent of Congress remains the ultimate issue, however, and unless this congressional intent can be inferred from the language of the statute, the statutory structure, or some other source, the essential predicate for implication of a private remedy simply does not exist.").
Because there is no private right of action under HAMP, Counts I and II of the Plaintiffs' Complaint are dismissed with prejudice.Id. at *2.