Arizona Attorney General Terry Goddard today filed a lawsuit against Bank of America alleging violations of the Arizona Consumer Fraud Act and violations of the consent judgment entered in March 2009 between Arizona and the Countrywide companies owned by BofA.
The lawsuit, filed in Maricopa County Superior Court, was triggered by hundreds of consumer complaints and follows a year-long investigation into Bank of America's residential mortgage servicing practices, particularly its loan modification and foreclosure practices.
Goddard said that Bank of America, the nation's largest residential mortgage loan servicer, should be leading the way out of the country's foreclosure crisis.
Instead, he said, "Bank of America has been the slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis. It has shown callous disregard for the devastating effects its servicing practices have had on individual borrowers and on the economy as a whole.â€
The complaint asks the court to hold the defendants in contempt for violating the consent judgment and to order them to pay restitution to eligible consumers and civil penalties, attorneys' fees, and costs of investigation to the state. It further asks the court to order the defendants to pay up to $25,000 for each violation of the consent judgment and up to $10,000 for each violation of the Arizona Consumer Fraud Act.
Goddard noted that Arizona has been particularly hard hit by the foreclosure crisis, as evidenced by recent reports ranking the state second behind Nevada in foreclosures. Nevada reportedly plans to file a similar lawsuit against Bank of America today.
The consent judgment was entered into on March 13, 2009 to resolve the Attorney General's allegations that Countrywide had engaged in widespread consumer fraud in originating and marketing mortgage loans.
In the judgment, Countrywide agreed to develop and implement a loan modification program for certain former Countrywide borrowers in Arizona. Bank of America acquired Countrywide on July 1, 2008 and has assumed responsibility for Countrywide's compliance with the consent judgment.
The complaint filed today alleges that, since the consent judgment was entered, Bank of America has repeatedly violated the judgment's provisions related to loan modifications. Instead of providing the relief to which eligible homeowners were entitled, Bank of America has failed to make timely decisions on modification requests and proceeded with foreclosures while modification requests were pending in violation of the agreement.
complaint also alleges that Bank of America has violated the Consumer
Fraud Act by misleading Arizona consumers about its loss mitigation
process and programs, including matters such as:
homeowners must be delinquent on their mortgage payments to be
considered for a loan modification.
much time it would take to receive a decision from Bank of America
on a modification request or a short sale request.
foreclosure would proceed while a modification or short sale request
was pending, or while a homeowner was making trial payments.
the homeowner had been approved for a loan modification.
to provide valid reasons why the homeowner was declined for a
-- Whether the homeowner would be approved for a permanent modification if the consumer successfully made all trial modification payments.As a result of Bank of America's deceptive practices, many homeowners who were already contending with other financial hardships have been led to unnecessarily deplete their dwindling savings in futile attempts to obtain the promised relief and save their homes, Goddard said.
Many homeowners who tried to obtain a modification from Bank of America ended up owing more principal on their loans or having less equity (becoming more "underwaterâ€) in their homes. Others gave up their chances to pursue other financial options, such as short sales, while trying to modify their loans with Bank of America.
These consumers endured months of frustrating delays, not knowing whether or when they would lose their homes, Goddard charged. He said they called Bank of America and resubmitted their paperwork over and over again in futile efforts to get the help they were promised.
"I am filing this lawsuit today because, after years of delay and broken promises, Arizonans should not have to wait any longer to seek redress,â€ Goddard said. "Our homeowners and communities need and deserve relief. Bank of America must be held accountable for its deceptive conduct and failed commitments.â€