Foreclosuregate Update: Nevada, Arizona Sue Bank of America

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Posted by AzBlueMeanie:

On Friday, the attorneys general of Arizona and Nevada 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. Arizona and Nevada Accuse Bank of America of Fraud – NYTimes.com:

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.

Arizona Attorney General Terry Goddard said "the evidence we have amassed in a year-long investigation shows a systematic disregard for their borrowers," even though Bank of America signed a consent decree two years ago promising to improve its treatment of mortgage customers, most of whom, at that time, were inherited when the bank acquired Countrywide Financial Corp. AZ sues Bank of America:

"What they have done in these cases is not done what they said they would do," Goddard said. Sometimes homeowners would not get a timely response; other times, Goddard said, the bank would not respond at all, "proceeding with foreclosure actions."

Goddard said he worked to negotiate a deal with the bank for several months, but the bank has been unwilling to provide the kind of relief he believes is necessary, especially considering the violations of the earlier consent decree.

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"We got a consent judgment against them two years ago and they haven't lived up to that."

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Goddard's biggest complaint is the use of a "dual track" process, getting homeowners to keep making mortgage payments with assurances their loans were being modified, rather than putting their money into alternative housing, while at the same time starting foreclosure proceedings.

"Deceptively, Bank of America, on many, many occasions, continued to accept mortgage payments while they continued to process individuals for foreclosure and, in fact, were ready to sell the house."

Goddard said his investigators even found situations in which the bank continued to demand and accept mortgage payments even after the home had been sold but before the original owner was evicted.

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Goddard also said while the bank's own website promises a response on home loan modifications within 90 days, "we've had people in the process for over a year."

He said some of the practices by the bank appear to be a deliberate maneuver to avoid working with homeowners, such as workers who answered calls from borrowers who had "little or no training" and no financial background. [Like that "my name is Peggy" guy in the TV ads.]

Goddard said even if he wins the lawsuit, it won't help those already evicted: Once a home has been sold to a third party in foreclosure, there is no way to reverse that deal unless the property was purchased by the mortgage holder in a credit bid and retains title.

What Goddard said he can get is $25,000 for each violation of the earlier consent decree and $10,000 per violation of Arizona's Consumer Fraud Act.

How many violations there are, he said, is unclear. Goddard said his office has received 300 to 400 specific complaints, but he believes there are many others he hasn't heard from.

Attorney General Terry Goddard was a guest on Countdown with Keith Olbermann on Monday night to discuss the lawsuit. This lawsuit is in addition to the 50 state attorneys general robo-signers foreclosure fraud lawsuit being led by Tom Miller, Iowa’s attorney general.

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