Deceptive loan modification practices result in class suit against Bank of America
A consumer banking deceptive practices class action lawsuit has been filed in the US District Court. The lawsuit alleges that Bank of America (NYSE:BAC) created and headed an illegal enterprise that was designed to defraud homeowners who sought loan modifications as part of the government’s Home Affordable Modification Program, or “HAMP.”
The complaint alleges that Bank of America masterminded a scheme that allowed it to deny giving thousands of its customers help in exchange for the $45 billion it took in bailout funds.
“We believe that Bank of America gamed the system, perpetrating a fraud on both its customers and American taxpayers,” said Steve Berman, one of the attorneys who filed the lawsuit. “BofA promised that it would work with homeowners to modify their mortgages under the HAMP program. Instead, it took $45 billion in taxpayer money and fought as hard as it could to avoid granting modifications, squeezing every last dollar from its customers and wrongfully foreclosing thousands of people’s homes in the process.”
The lawsuit alleges that Bank of America employed contractors who repeatedly lied to Bank of America’s customers. The suit claims that employees of one such contractor, “Urban,” answered the phone, “Bank of America ??” Office of the President,” when they did not work directly for Bank of America.
Former employees confirm Bank of America delayed modifications on purpose
Former employees have also confirmed that Bank of America instructed its employees to delay modifications by claiming that it had not received paperwork and payments when it had, indeed, received them. Former employees were also instructed to decline modifications en masse in periods known internally as “blitzes.”
The complaint also alleges that employees who questioned the ethics of declining modifications for fraudulent reasons, or of lying to customers, were subject to discipline including termination.
The lawsuit claims that Bank of America is guilty of violating the Racketeering Influenced Corrupt Organizations Act, or RICO and asks for damages to be awarded to a proposed class defined as:
“All individuals whose home mortgage loans have been serviced by BOA and who, since April 13, 2009, (1) applied to BOA for a HAMP loan modification, (2) fulfilled an FHA Trial Period Plan Agreement or any other trial-payment agreement that was not issued pursuant to SD-09 (form 3156), (3) sent documents to, or received documents or other communications from, Urban employees in connection with their attempts to modify their home mortgage, and (4) did not receive, within 30 days after making all required trial payments, a permanent loan modification that complied with HAMP rules.”