The suit filed this week represents additional fallout from the alleged performance by the nation’s second-largest bank in the government’s foreclosure-prevention campaign, known as HAMP, or Home Affordable Modification Program.
The state and federal overseers of the National Mortgage Settlement, known as the Monitoring Committee, have declined to take additional enforcement action against Bank of America and Wells Fargo, rejecting a request by New York Attorney General Eric Schneiderman to apply expanded civil penalties for servicing violations.
The nation’s top housing official said more banks in coming weeks will join the original five as part of the historic settlement. In another development, talks are underway to strengthen new rules against “dual tracking” — the practice of foreclosing on homeowners who are trying to negotiate a mortgage reduction plan.
At least one lawmaker wants a government watchdog to investigate the mortgage-modification practices of Bank of America, in the wake of headline-grabbing allegations that the nation’s second-largest bank lied to homeowners as part of a strategy to push them into foreclosure or a more profitable in-house refinance product.
The practice known as ‘dual tracking’ — when a lender moves ahead with foreclosure as it negotiates a loan modification with the same homeowner – persists among the big banks under the National Mortgage Settlement.
Bank of America allegedly denied homeowners mortgage modificatons and lied to them as part of a strategy to steer them into foreclosure, according to tactics outlined by former bank employees whose accounts are part of a lawsuit.
Florida’s Attorney General said complaints against Bank of America are revealing patterns of “systematic” rule violations under the National Mortgage Settlement, including lengthy delays in providing loan modifications and sending state officials “litigation letters.”
Under the terms of the agreement announced by U.S. housing officials, Bank of America will pay $22,449 to a woman who was denied a mortgage modification after she had provided full documentation on a disability that kept her from working.
The nation’s second largest bank said it was “surprised and disappointed” to learn of New York Attorney General Eric Schneiderman’s intent to sue Bank of America (and Wells Fargo) for violating servicing standards under the $25 billion National Mortgage Settlement (NMS).
Banks and their subsidiaries are still filing invalid documents and wrongly foreclosing on properties, an analysis of thousands of documents and lawsuits show in California’s Bay Area.