Today's Trends in Credit Regulation

Eleventh Circuit Finds No Private Right of Action under HAMP
By Jeffrey L. King

A recent decision by the U.S. Court of Appeals for the Eleventh Circuit provides good news for mortgage servicers. The appellate court, consistent with other lower court decisions, has concluded that borrowers do not have a private right of action against servicers for alleged errors made by servicers in the course of helping borrowers obtain assistance under the Home Affordable Modification Program. In the case of Nelson v. Bank of America, the Eleventh Circuit decided – in an unpublished opinion – whether a servicer’s failure to meet HAMP’s requirements affords a borrower an individual right of action. The appellate court reviewed the case following an appeal of a decision in favor of the servicer by the U.S. District Court for the Middle District of Florida.

In Nelson, Thelma Nelson sought a declaratory judgment against the defendants, Bank of America, N.A. and its subsidiary, BAC Home Loans Servicing, LP. Nelson claimed that the defendants failed to satisfy their obligations under the terms of a temporary trial period plan based on the requirements of HAMP. Nelson had requested that the lower court determine the parties’ responsibilities under the temporary trial period plan and grant her a modification of her mortgage note consistent with HAMP.

In response, the defendants filed a motion to dismiss Nelson’s complaint, arguing that HAMP does not create a private right of action. The defendants also argued that Nelson was merely an incidental beneficiary of their participation in HAMP; therefore, they had no HAMP-mandated legal duties towards her.

After briefly reviewing the statutory provisions that brought about HAMP, the Eleventh Circuit proceeded to list the decisions of several district courts that had already grappled with the same question. In a rare showing of judicial consensus, all of the cases had concluded that there is no private right of action under HAMP. The Eleventh Circuit cited no decisions with a contrary ruling.

Based upon this overwhelming precedent and the legislative background, the Eleventh Circuit concluded that “nothing express or implied in HAMP gives borrowers a private right of action.” This is an important decision for mortgage servicers as they continue to expend time and resources to keep up with changing HAMP requirements in an effort to help borrowers avoid foreclosure.

Nelson v. Bank of America, N.A., 2011 U.S. App. LEXIS 22255 (11th Cir. (M.D. Fla.) October 31, 2011).

Jeffrey L. King is a partner in the Virginia office of Hudson Cook, LLP. Jeff can be reached at 804-752-7030 or by email at

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