Posted on 02 May 2010 by ElizabethRoth
A group of California homeowners is suing Bank of America, alleging that the national lender is intentionally withholding government funds intended to stave off foreclosures.
The case has been filed in the U.S. District Court in Northern California; a similar lawsuit was filed in Washington state last month by the same law firm handling the California suit (not ours).
According to a report on the suit by RealEstateRama California:
Bank of America accepted $25 billion in government bailout money financed by taxpayer dollars earmarked to help struggling homeowners avoid foreclosure. One in eight mortgages in the United State is currently in foreclosure or default.
Bank of America, like other TARP-funded financial institutions, is obligated to offer alternatives to foreclosure and permanently reduce mortgage payments for eligible borrowers struck by financial hardship but, according to the lawsuits, hasn’t lived up to its obligation…
Bank of America continues to ignore TARP regulations and instead creates more financial pressure on homeowners, the court filing states.
The lawsuits charge that Bank of America intentionally postpones homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by taxpayer dollars financing TARP-funds and also collects higher fees and interest rates associated with stressed home loans.
Posted on 30 March 2010 by DavidTanner
Last week Bank of America said that it would forgive some mortgage debt to help keep distressed borrowers from losing their homes.
The by-invitation-only program announcement came the same week as the news that BoA had settled a suit brought by the state of Massachusetts for predatory lending.
From the BoA press release announcing its new Earned Principal Forgiveness program:
Bank of America announced it will look first at principal forgiveness – ahead of an interest rate reduction – when modifying certain subprime, Pay-Option and prime two-year hybrid mortgages qualifying for its National Homeownership Retention Program (NHRP). Several enhancements are being made to the program, including the introduction of an earned principal forgiveness approach to modifying mortgages that are severely underwater.
Basically, the program parks a maximum of 30% of the value of the loan in a special interest-free account. As long as the homeowner continues to make payments, a percentage of the principal held in the special interest account will be forgiven each year – either until the balance is zero, or the housing market recovers and the borrower no longer has negative equity.
BoA is targeting delinquent homeowners whose mortgage balance is at least 20% greater than the value of their home.
Read the New York Times coverage of the announcement here.
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