When we first learned that a federal lawsuit had been filed against Bank of America in Newark, New Jersey, we were not particularly surprised. America’s largest bank long ago ceased to make news when accused of fraud. Unless the accusations are really sensational or large – last month’s billion dollar false clams act cases certainly qualifies – suits against Bank of America aren’t that newsworthy anymore. Like the Death Star in Star Wars, the nation’s biggest banks simply believe they are too big too fail. We believe they have become too big to care.
The newest lawsuit is a little different; it was brought by another mortgage company. American Financial Resources says it contracted with Countrywide Mortgage to service approximately $2 billion in residential loans. Now they claim that Bank of America botched the job. (Bank of America acquired Countrywide after the 2007 financial meltdown.)
According to the complaint, BOA failed at just about everything they were paid to do. This includes failing to process HAMP modification requests (HAMP is the Home Affordable Modification Program), failing to maintain proper records, failing to mail certain notices to borrowers required by law, failing to make good faith efforts to resolve disputes and failing to comply with the National Housing Act. Any person who is on the wrong end of a Bank of America foreclosure probably has encountered one or more of these problems.
In a rare glimpse into the servicing world, American Financial Resources says that the amount of servicing fee monies paid to Bank of America increases by 300 to 600% once a loan is more than 60 days past due. The complaint accuses Bank of America of intentionally allowing homeowners to become seriously past due in order to collect additional fees. That, of course, flies in the face of their contractual obligation to make a good faith effort to resolve homeowner disputes.
Individual homeowners face a tough battle when taking on big banks. It’s nice to know that homeowners are not alone. This complaint demonstrates that other lenders are also having similar issues. Bank of America is one of the largest loan servicers in the country and processes payments and provides other services to thousands of other lenders and mortgage pools. Perhaps if enough other lenders join forces, Bank of America and the other large loan servicers will begin to focus more on quality control.
The complaint was filed on November 16th. No response has yet been filed by Bank of America.
About the author. Brian Mahany is a lawyer specializing in lender liability issues. He represents both individuals and industry whistleblowers. Brian welcomes comments and questions and can be reached through his law firm’s website, http://www.mahanyertl.com or by telephone at (414) 704-6731.