Bank of America Sued for Alleged Mortgage Fraud

Bank of America Corp. violated Arizona's consumer fraud law by misleading consumers who tried to reduce their mortgage payments so they could keep their homes, state Attorney General Terry Goddard said Friday as he filed a civil lawsuit against the bank.

The bank also violated the terms of a 2009 consent agreement requiring the bank's Countrywide mortgage subsidiary to implement a loan modification program, the lawsuit alleges.

Hundreds of homeowners kept making their mortgage payments because Bank of America repeatedly assured them their loan was being modified, he said. Instead, many lost their homes anyway.

"Those people could have used that money for something else," Goddard said. "They were deceived into continuing to make mortgage payments when they had no hope of saving their homes."

Goddard said Nevada is expected to file a similar lawsuit later Friday. The two states are among the nation's hardest hit by homeowners defaulting on mortgages as adjustable payments soared, people lost their jobs, and home values collapsed.

The attorney general's office was deluged with consumer complaints and launched an investigation more than a year ago, Goddard said. Settlement talks with Bank of America began in April but ultimately collapsed Thursday.

Goddard, a Democrat, is leaving office in January after an unsuccessful run for governor and will be replaced by Republican Tom Horne. A Bank of America spokesman criticized Goddard for taking action while multistate negotiations on foreclosures were under way.

"We are disappointed that the suit was filed in (Attorney) General Goddard's last days in office, particularly because we and other major servicers are currently engaged in discussions led by Attorney General (Tom) Miller in Iowa to try to address foreclosure-related issues more comprehensively," said the e-mailed statement from Dan Frahm, a senior vice president for the Charlotte, N.C.-based bank. "In addition to our own, ongoing program improvements we have committed to, we believe that is the approach that will best serve Arizonans who need assistance."

Frahm's statement noted that Arizona had been an active participant in those discussions and did not have to go to the expense of lone litigation.

"Bank of America will continue to work towards fair and equitable foreclosure related practices through the multistate Attorneys General process with the goal of getting Arizonans assistance without the cost, delay and uncertainty of this litigation," Frahm wrote.

The lawsuit, filed in Maricopa County Superior Court, alleges that the bank has repeatedly violated terms of the consent agreement. The pact was expected to lead to loan modifications for thousands of Countrywide customers in Arizona, which had the nation's fourth-highest foreclosure rate last month, according to RealtyTrac Inc. But Bank of America, which had acquired Countrywide in July 2008, failed to make timely decisions on modification requests and went ahead with foreclosures, Goddard said.

"The quick summary is they violated our court-imposed agreement as to Countrywide borrowers, and then as to many of Bank of America's borrowers, they committed fraud," Goddard said. "They told them things that they did not do."

The lawsuit asks for contempt citations against the bank for violating the consent agreement. It also seeks restitution for consumers, civil penalties, legal fees, plus $25,000 for each consent agreement violation and up to $10,000 for each violation of the Arizona Consumer Fraud Act.

Bank of America shares rose 9 cents to $12.61 in afternoon trading Friday.

[PR_in_Alabama]

I hope the lawyers who look over Bank of A policies get a kick in the A$$.

[earnhartjj]

I'm sorry to hear that I'm not the only one having problems with B of A mortgage. . . Our mortgage was originally through Countrywide, who unknowingly to us, rewrote a portion of our mortgage under a government agency. Now we can't refinance because of it. Then at the same time that the transition between the two mortgage companies took place my husband was off of work for a job related injury. B of A was unwilling to work with us through this time, and all we needed was a couple months of partial payments to be acceptable (and by partial I mean that we were going to pay half or more of our monthly mortgage). One month we made a partial payment, that's all, one month. All the other months we made our payments as required. That is until we discovered that B of A didn't accept partial payments. So, one month of paying 2/3 of our mortgage made us one month behind. The next month of paying our full mortgage made us two months behind. Paying our full mortgage on the third month made us three months behind. When we asked for assistance we were told that our income at that time was too low for us to get assistance and that we would just be forclosed on when the time came. After a month of not paying any mortgage the company agreed to work with us on a modification, which would require a trial payment for three months. A trial payment amount was established and for three months we paid this amount as directed. When the trial payment period had ended we then received a fed-ex envelope with paperwork stating that our modification trial payment period had been approved and to start payment of this trial amount (which was a few hundred dollars more that the first trial payments that had been set). When contacting B of A, they stated they "forgot" that our property taxes and insurance where part of our 30 year fixed loan, so the amount had to be adjusted. So, we made yet another three months of trial payments. Of course there were months inbetween these trial payments in which they had to do their (B of A) paperwork. So, we are now ten months out from the start of everything. Meanwhile, our mortgage looks as is it hasn't been paid at all during this time (since all trial payments are put in a "third party account" to be uses as a down payment for the re-write of the loan once modification is approved). Since, we have received paperwork stating that we don't qualify for a modification since our household's monthly gross income is too high. Well the amount recorded by B of A as being our monthly gross income, was actually recorded incorrectly (since it is actually half of what they had listed). We have disputed the amount and have yet, after almost two months, to have heard from the company (B of A). . . So, now we sit and wait, since we don't have any other options. I'm sorry to hear others are dealing with this same type of heartache. Hopefully it all ends well, for EVERYONE.

[get_down]

Somehow I'm not surprised that BoA is involved in some fraudulent practices. My personal experience dealing with BoA is they have questionable transactions sometimes at the best, deceptive or even illegal business conduct other times at the worst. That's the main reason I choose to bank with Credit Union instead - at least CU is more honest.

[robe59]

Couldn't happen to a nicer institution.

[tsigili]

It is going to be a long time, before the mortgage mess is totally sorted out.