The Home Affordable Modification Program (HAMP) was launched by the Obama administration to help the housing market avoid further decline. Since its launch, though, it has left numerous homeowners angry and frustrated – in fact, so angry and frustrated were the homeowners that they are now starting to file lawsuits against mortgage servicers.

Anthony and April Soper is just one of the thousand homeowners that have filed a case against their servicer – in this case the nation’s largest bank, Bank of America. When the couple started experiencing financial trouble in October of last year, they applied for mortgage adjustment with HAMP and were enrolled for a trial plan that reduced their monthly payment from $4,000 to $1,826. The couple claims they paid their reduced mortgage on time (sometimes even early) and even did everything that was required of them, but they still got denied permanent modification and they do not know why.

The Lake Stevens, Washington-couple may or may not keep their home, depending on the result of a class-action lawsuit filed against Bank of America. On September 30, a Nashville federal court will also hear a consideration to consolidate Soper’s case with a dozen or so more cases against the nation’s largest bank. Other major servicers, like JPMorgan Chase and Wells Fargo, are also facing similar pending cases – and if all these cases are taken together, it demonstrates a growing public anger and frustration against HAMP and its mortgage servicers.

Permanent modifications are supposed to lower by 31% mortgage payments in the next five years. So far, though, of the 1.3 million who were given trial plans since the April 2009 launch, only 33% graduated to permanent status. Those who were denied permanent modifications claim that servicers are in breach of contract as trial plans can be equated to contracts.

The servicers claim that this is not so; Bank of America says they may consider borrowers for a trial plan but it is still the bank’s discretion to grant permanent modification. The banks go so far as to say that recent cases may also be dismissed as previous HAMP-related cases against servicers have already been dismissed. Previous lawsuits, claiming that denying homeowners of permanent modification is a breach of contract with the Treasury Department, were dismissed on grounds that homeowners are not party to the contract.

This is why newer cases have taken a different angle: the contracts are now direct agreements between servicers and HAMP participants. According to an August 20 Treasury report, there are 620,000 homeowners who could sue breach of contract. The lawsuits quote the agreement as saying, “”If I am in compliance with this trial period plan and my representations … continue to be true in all material respects, then the servicer will provide me with a Home Affordable Modification Agreement … that would amend and supplement the mortgage on the property, and the note secured by the mortgage.”

Soper’s case in particular alleges a few things: purposely denying permanent modifications to profit from huge late fees, instructing customer service representatives to give false information to homeowners regarding not receiving documents, processing foreclosures even when a homeowner is still on trial plan, and even asking HAMP applicants to pay i[front to even be considered for a modification. Generally, lawsuits claim that foreclosure proceedings while borrowers are on trial plan is a violation of the Treasury directive.

The sad thing about all these is that the Treasury has no power to overturn the servicers’ decision. In April, the Congressional Oversight Panel urged the Treasury to start taking action regarding the quality of denial and cancellation reasons. Even the Government Accountability Office admitted in June that the servicers have been erroneously denying borrowers permanent modifications due to an inaccurate formula used to weigh the costs of modification over foreclosing.

Treasury defends itself by saying they have been asking banks to go back and correct errors. It even claims that, though there are numerous denied permanent modifications, 45% of them have been offered private modifications from the servicer. There are also less than 2% homes giving in to foreclosures, says Treasury.

Whether Soper – and other homeowners ‘heartbroken’ over HAMP – wins their lawsuit against the servicers, it remains to be seen.