Bank of America Mortgage Service Settlement Should Be Voided, Nevada Says
By Sophia Pearson – Aug 31, 2011 10:00 AM ET
Nevada asked a U.S. judge to terminate a settlement with Bank of America Corp. (BAC) over home-loan modifications tied to its Countrywide mortgage unit, saying the company hasn’t complied with terms of the accord.
Bank of America increased consumer interest rates and monthly payments in violation of a consent decree and required homeowners to provide extensive documentation to qualify for modifications even though the settlement calls for a “streamlined” approach, the state said yesterday in a statement. The state is seeking to file an amended complaint against the bank with additional claims.
“After two and a half years of lost implementation — of borrowers denied modifications, discouraged by repeated and futile efforts to obtain help, or already subject to foreclosure — the state no longer can get the benefit of its original settlement with defendants,” state Attorney General Catherine Cortez Masto said yesterday in court papers in Reno.
Nevada’s request comes as other states challenge Bank of America’s proposed $8.5 billion mortgage-bond settlement with investors. New York says the deal, which would resolve claims from investors in Countrywide Financial Corp. mortgage bonds, is unfair to investors. The FDIC and other federal agencies are seeking more information to evaluate the accord.
A Bank of America spokesman, Jerome F. Dubrowski, said the bank didn’t breach the Nevada settlement.
“Bank of America believes the best way to get the housing market going again in every state is a global settlement that addresses these issues fairly, comprehensively and with finality,” Dubrowski said in an e-mail.
Nevada sued in December claiming the bank, which acquired Countrywide in July 2008, misled consumers about requirements for the modification program and how long it would take for requests to be decided. The bank provided inaccurate and deceptive reasons for denying requests, according to the complaint.
The suit followed the announcement of a 50-state investigation by attorneys general into bank foreclosure practices after reports that faulty documents were being used to seize homes.
Since then, a state attorneys general and officials from federal agencies including the Justice Department have been negotiating a settlement with the five largest mortgage servicers in the U.S.
Masto is among attorneys general who have criticized any settlement that would protect the banks from additional state probes.
The case is State of Nevada v. Bank of America Corp., 11- cv-00135, U.S. District Court, District of Nevada (Reno).
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