Analysis: Lawsuits Against Bank of America for Misdeeds Related to Mortgage Loan Modifications
The New York Times reports that the attorneys general of both Arizona and Nevada have filed major fraud lawsuits against Bank of America, the largest mortgage servicer in the United States, for its failure to comply with loan modification requirements.
The Nevada lawsuit claims that Bank of America misled vulnerable homeowners in numerous ways, including instructing them to not make mortgage payments, when in fact they were not required to be delinquent to apply for loan modifications under HAMP, nd falsely promising that homeowners would not be foreclosed on while their mortgages were under review for loan modifications, and denying loan modifications for false, unfair, and deceptive reasons. “They waited anxiously, month after month, calling Bank of America and submitting their paperwork again and again, not knowing whether or when they would lose their homes,” states the attorney general.
In the Arizona lawsuit, the allegations are substantially similar, but also relate to a previous consent judgment under which Bank of America promised to evaluate certain former Countrywide loans for modification prior to foreclosing. Bank of America allegedly did not comply with the consent judgment.
In my own experience litigating against Bank of America in both state and federal court here in Massachusetts, I have seen these same things over and over. Homeowners’ documents are lost, mishandled, and neglected. Homeowners are foreclosed on wrongfully while they are under the belief that they are under consider for loan modifications. Culik Law has multiple cases against mortgage servicers, including Bank of America, for these same issues. These are widespread throughout the mortgage industry, and include not just Bank of America, but all the major mortgage servicers such as Wells Fargo, Chase, Citi, and countless others.
Most egregiously, the lawsuits note something that I also see regularly in my practice in MA: the banks lying to people about the status of their modification applications. People who are in the process of being foreclosed on are falsely told that their applications are under review, when in fact no one has been reviewing the package of financial and personal documentation that the homeowner has meticulously collected and provided at the bank’s request. In one case, Bank of America told homeowners that they had postponed a foreclosure when the foreclosure had already been conducted. I have seem similar false statements. Unless mortgage servicers such as Bank of America are held accountable for their promises (for which they were made billions of our taxpayer dollars) to evaluate homeowners for loan modifications, the foreclosure crisis is going to continue at full throttle.