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Two States Sue Bank of America Over Mortgages
The attorneys general of Arizona and Nevada on Friday filed a lawsuit against Bank of America, accusing it of engaging in “widespread fraud” by misleading customers with “false promises” about their eligibility for modifications on their home mortgages.
In withering complaints filed in state courts in both states, the attorneys general accused Bank of America of assuring customers that they would not be foreclosed upon while they were seeking loan modifications, only to proceed with foreclosures anyway; of falsely telling customers that they must be in default to obtain a modification; of promising that the modifications would be made permanent if they completed a trial period, only to renege on the deal; and of conjuring up bogus reasons for denying modifications.
“Bank of America’s callous disregard for providing timely, correct information to people in their time of need is truly egregious,” Catherine Cortez Masto, the attorney general of Nevada said in a statement.
The lawsuit comes as top prosecutors nationwide are investigating whether the paperwork that banks used to support foreclosure cases often was egregiously sloppy, sometimes relying on robo-signers — employees who signed hundreds of documents a day — to sign sworn court documents.
Tom Miller, Iowa’s attorney general who is heading the multistate investigation into foreclosure fraud allegations, said the two states’ lawsuits would not dilute his inquiry. A Bank of America spokesman, Dan Frahm, said bank officials were disappointed that the lawsuits were filed “at this time,” given the bank’s cooperation with the multistate investigation.
Arizona and Nevada are among the states hardest hit by the housing downturn, and the state attorneys general said their lawsuits were prompted by hundreds of complaints by consumers who sought modifications of their mortgages.
The complaints in the lawsuit in many ways echoed problems encountered by homeowners nationwide who have tried with little luck to obtain mortgage modifications from banks, often through a federal program set up for that purpose. Thousands of homeowners complain that banks repeatedly lose their documents, fail to return calls or foreclose when a homeowner believes he or she is still negotiating a modification.
The lawsuit noted that Bank of America ranked last in “virtually every homeowner experience metric” monitored in a monthly report on the federal home loan modification program.
Former employees said that Bank of America’s modification staff was “chaotic, understaffed and not oriented to customers,” according to a news release. The Arizona complaint cites the case of an Apache Junction couple who faced foreclosure. Terry Goddard, attorney general of Arizona, said the lawsuit was filed in part because the bank had violated the terms of a 2009 consent decree that Countrywide Home Loans — which Bank of America purchased in 2008 — had engaged in “widespread consumer fraud” in originating and marketing mortgages. As part of the judgment, Countrywide had agreed to create a loan modification program for some Arizona homeowners.
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In withering complaints filed in state courts in both states, the attorneys general accused Bank of America of assuring customers that they would not be foreclosed upon while they were seeking loan modifications, only to proceed with foreclosures anyway; of falsely telling customers that they must be in default to obtain a modification; of promising that the modifications would be made permanent if they completed a trial period, only to renege on the deal; and of conjuring up bogus reasons for denying modifications.
“Bank of America’s callous disregard for providing timely, correct information to people in their time of need is truly egregious,” Catherine Cortez Masto, the attorney general of Nevada said in a statement.
The lawsuit comes as top prosecutors nationwide are investigating whether the paperwork that banks used to support foreclosure cases often was egregiously sloppy, sometimes relying on robo-signers — employees who signed hundreds of documents a day — to sign sworn court documents.
Tom Miller, Iowa’s attorney general who is heading the multistate investigation into foreclosure fraud allegations, said the two states’ lawsuits would not dilute his inquiry. A Bank of America spokesman, Dan Frahm, said bank officials were disappointed that the lawsuits were filed “at this time,” given the bank’s cooperation with the multistate investigation.
Arizona and Nevada are among the states hardest hit by the housing downturn, and the state attorneys general said their lawsuits were prompted by hundreds of complaints by consumers who sought modifications of their mortgages.
The complaints in the lawsuit in many ways echoed problems encountered by homeowners nationwide who have tried with little luck to obtain mortgage modifications from banks, often through a federal program set up for that purpose. Thousands of homeowners complain that banks repeatedly lose their documents, fail to return calls or foreclose when a homeowner believes he or she is still negotiating a modification.
The lawsuit noted that Bank of America ranked last in “virtually every homeowner experience metric” monitored in a monthly report on the federal home loan modification program.
Former employees said that Bank of America’s modification staff was “chaotic, understaffed and not oriented to customers,” according to a news release. The Arizona complaint cites the case of an Apache Junction couple who faced foreclosure. Terry Goddard, attorney general of Arizona, said the lawsuit was filed in part because the bank had violated the terms of a 2009 consent decree that Countrywide Home Loans — which Bank of America purchased in 2008 — had engaged in “widespread consumer fraud” in originating and marketing mortgages. As part of the judgment, Countrywide had agreed to create a loan modification program for some Arizona homeowners.
