It’s no secret that the federal government’s Home Affordable Modification Program, or HAMP, has produced lackluster results, with fewer than 450,000 permanent modifications realized since the program began in spring 2009. This is partly because banks have been less than willing to cooperate. Often, they are opting to conduct modifications through proprietary programs instead because there is less federal oversight and transparency. There has also been no mandate requiring strong modifications with principal reductions, widely regarded as necessary for long-term success. (The recently unveiled FHA Short Refinance option is a small start; It offers certain underwater, non-FHA borrowers modifications that write off at least 10 percent of the unpaid principal balance of the first mortgage—if the lender agrees.) The most common lower-interest-rate-only, term-extending modifications that are currently being offered, however, are frequently criticized as a raw deal.

As a result, the lawsuits are coming. Class-action lawsuits against Bank of America, JPMorgan Chase, and Wells Fargo are popping up because homeowners who received temporary modifications but never reached permanent status say that their credit has been damaged, that being placed in modification limbo only delayed an inevitable foreclosure, and that “servicers are purposely denying permanent modifications and keeping loans in default so lenders can profit from heftier late fees and other charges,” according to a report in USA Today. The Treasury Department reports that more than 620,000 modifications have been canceled since HAMP’s launch. (More on HAMP and where it should be headed.)