[JURIST] Arizona Attorney General Terry Goddard [official profile] filed a lawsuit [press release] against Bank of America (BOA) [corporate website] on Friday for misleading customers in mortgage modification and foreclosure practices. Specifically, the complaint [complaint; PDF] alleges that BOA violated a 2009 consent agreement, in which it agreed to develop and implement loan modification programs, by continuing to engage in widespread consumer fraud by misrepresenting to Arizona customers whether they were eligible for modifications of their mortgage loans. Additionally, Goddard alleges that BOA is also in violation of the Arizona Consumer Fraud Act [text] by failing to offer loan modifications in a timely and promised manner and deceiving customers about the details surrounding load modification requests. As one of the states most impacted by the foreclosure crisis, Goddard expressed the urgency for immediate loan relief in Arizona:
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…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. Our homeowners and communities need and deserve relief. Bank of America must be held accountable for its deceptive conduct and failed commitments.
As a result of the alleged deceptive practices, many Arizona homeowners claimed they have lost their homes, dwindled their savings, or now owe more on their homes than before, all while continuing to make their mortgage payments. Nevada, which has faced more foreclosures than Arizona, subsequently filed suit against Bank of America for similar practices.
Bank of America has recently been the target of other lawsuits alleging fraud. Earlier this month, the US Securities and Exchange Commission (SEC) [official website] reached a $137 million settlement agreement [press release; JURIST report] with BOA over fraud charges [order, PDF] in a lawsuit that claimed BOA used anti-competitive bidding processes with 20 state municipalities. In June, BOA subsidiary Countrywide Home Loans, Inc reached [JURIST report] a $108 million settlement agreement [text, PDF] with the Federal Trade Commission (FTC) [official website] in response to a lawsuit that charged it with collecting excessive fees from homeowners facing foreclosure. In February, the Attorney General of New York brought a suit against BOA for misleading shareholders [JURIST report] by not disclosing to share holders their loss profits.
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