A Westbury family is the lead plaintiff in a new class-action suit against a major home-loan servicing company, Saxon Mortgage Services Inc., charging that it intentionally misused the federal loan modification process, harming homeowners and improperly profiting from their hardship.
The suit was filed Monday at U.S. District Court in Brooklyn, by Ranujoy and Debora Pandit, on behalf of a class of complainants who, their attorney said in the filing, were deprived of the U.S. government's intended financial rescue plan for distressed mortgagees.
The process of applying for, and working with, the federal HAMP (Home Affordable Modification Program) department at Saxon was a sham, the Pandits said. The Pandits' home phone in Westbury was not answered Friday, and their voicemail was full and unable to take new messages.
Officials at Saxon, which is owned by the financial services company Morgan Stanley, could not be reached for comment Friday. Morgan Stanley itself declined to comment.
"Saxon routinely and systematically misled, and continues to mislead . . . hapless homeowners into making monthly 'trial' payments . . . and into repeatedly sending and resending documents" in doomed attempts to qualify for lower monthly payments, the suit says. The company also fostered "the mistaken belief that Saxon was considering, and would consider, such applications in good faith."
The U.S. government gave financial incentives to mortgage servicers such as Saxon, but instead the company decided to make more money by misconduct, the suit alleges.
Saxon "rejected their modification applications, pocketed portions of these payments toward late fees, penalties and other delinquency charges, pocketed the taxpayer money, and proceeded with foreclosure," the suit said.
Photo: Morgan Stanley is on the Times Square billboard after announcing healthy profits. (Jan. 18, 2011)
Read more of Inside Long Island Business