“Financial Assistance” Under Section 3605(b) of FHA Does Not Include Assistance For Borrowers Who Have Defaulted On Their Loans

As alluded to above, there were several issues of note in Gorham-Dimaggio v. Countrywide Home Loans, Inc. 1:08-CV-00019 (N.D.N.Y., December 17, 2008) but the FHA claim is particularly noteworthy given the increasing frequency in which we are seeing this statute used in garden variety mortgage disputes. In this case borrower received a bill from the lender showing an unexpected increase. She paid that bill, but only part of the next one. Her check was returned and she defaulted on the mortgage loan shortly thereafter. Her attorney made inquiries and was told the increase followed an escrow re-analysis. She did not try to call the lender herself but the lender tried to reach her to encourage her to re-finance. During those calls she was told that that the escrow amount had not increased and the total monthly payment was what she had originally paid. She filed a multi-count lawsuit, including a count under Section 3605 of the FHA. 42 U.S.C. § 3605(b)(1). The court said she had no claim because she did not allege that she ever attempted to procure new financing, or even information regarding such financing from the lender-defendants. She erroneously suggests that the lenders failure to assist her or provide her with financing options is not financial assistance as that is defined under Section 3605. Under a [sic] plain language of the statute, ‘financial assistance’ means providing prospective purchasers with financing information to help them purchase or rent a home, and does not include assistance for borrowers who have defaulted on their loans. 42 U.S.C. § 3605(b)(1 24 C.F.R. § 100.120. Moreover, the court determined that although she had a disability she only offers conclusory allegations to demonstrate that discriminatory measures were implemented because of her disability, and that able-bodied persons were not affected. These allegations were actually contradicted by other allegations by Plaintiff that the Defendants’ motive in the conduct alleged was retaliatory; made in an effort to recoup concessions and not motivated by any animus towards her status as a disabled person.

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