Newscast Media NEW YORK—A Manhattan jury found Bank of America responsible for fraud in its mortgage-related practices, in conjunction with its now-defunct Countrywide Financial Corp. affiliate.
Forbes said: “The verdict is a win for the US government as this is one of the few cases stemming from the financial crisis that it’s taken to trial.
“In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis,
Bank of America purchased Countrywide, thinking it had gobbled up a cash cow. That
profit, however, was built on fraud, as the jury unanimously found,” US Attorney Preet
Bharara said in a statement.
Bank of America may or may not appeal. The bank said in a statement, “The jury’s decision concerned a single Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company. We will evaluate our options for appeal.”
Bank of America’s problems aren’t over yet. The Securities and Exchange Commission is also suing the bank for “fraud” because BofA obtained money and property by means of untrue statements of material fact, and also engaged in transactions, practices and courses of business which would and did operate as a fraud and deceit upon the purchasers of such securities.
One of the counts Bank of America is being charged with is failure to file a prospectus with the SEC. The prospectus is accompanied by the infamous Pooling and Servicing Agreement (PSA) the one every lawyer is afraid. No lawyer in the history of litigation of mortgage-backed securities, has been successful in producing a valid PSA or prospectus, because they don’t teach “structured financing” in law school.
Under US law, if a bank claims to own a mortgage in form of a mortgage-backed security, it has to have a prospectus that is valid and current. If it can produce the prospectus, it cannot produce the Pooling and Servicing Agreement, therefore it cannot win a case, because the mortgages are based on fraud. Think of it as a driver being stopped by police for a traffic violation and the driver cannot produce a driver’s license and proof of insurance. What do you think would happen? Here is the specific law:
15 U.S.C. §§ 77e(b)(1):
(b) Necessity of prospectus meeting requirements of section 77j of this title
“It shall be unlawful for any person, directly or indirectly—(1) to make use of any means
or instruments of transportation or communication in interstate commerce or of the
mails to carry or transmit any prospectus relating to any security with respect to which a
registration statement has been filed under this subchapter, unless such prospectus meets the requirements of section 77j of this title.”
The SEC is asking for an unspecified amount of damages including injunctive relief against Bank of America, while the US government is looking to get $848 million out of BofA.
Bank of America Corp said on Thursday that it was cutting 1,200 to 1,300 mortgage jobs.
Categories: News Tags: Bank of America, Bank of America class action, Bank of America Countrywide Financial Corp, Bank of America foreclosure lawsuit, Bank of America Merril Lynch, bank of america mortgage fraud, Bank of America SEC lawsuit, Bank of America settlement, Department of Justice Bank of America, US government vs. Bank of America
Newscast Media — Bank of America has been hit with a class action on behalf of homeowners seeking damages for alleged disregard of foreclosure process rules. The suit, filed Wednesday in federal court in Newark, N.J., accuses Bank of America and two subsidiaries, LaSalle Bank and BAC Home Loans Servicing, of “an undisciplined rush to seize homes” through “pervasive and willful disregard of knowledge, facts and statutes.”
Bank of America has filed foreclosure proceedings on many mortgages in New Jersey without holding the necessary rights as the mortgagee or assignee at the time of foreclosure, the suit says.
“Many thousands of foreclosures are plainly void under statute and settled New Jersey case law. Many borrowers never obtain statutorily required notices, and many foreclosure suits are filed entirely based in inaccurate recitations concerning ownership of the mortgage, the note, or the assignment,” the suit says.
The putative class in the suit, Beals v. Bank of America, N.A., 10-cv-05427, consists of all named defendants in pending New Jersey foreclosure actions initiated by Bank of America or its affiliates. The complaint includes counts of common-law fraud, breach of the covenant of good faith and fair dealing and violations of the New Jersey Fair Foreclosure Act and Consumer Fraud Act. The plaintiffs cite a recent, well-publicized admission by a Bank of America official in a Massachusetts foreclosure case that she signed thousands of foreclosure complaints without reviewing them.
They also say the fact that the bank and its affiliates, by imposing a moratorium on foreclosures from Oct. 8 to Oct. 18 while reviewing their procedures, “have admitted that in all of their foreclosure cases, they, as a moving party, prosecute their claims with a complete disregard of whether or not they have met their burden.”
The plaintiffs claim they are entitled to compensation for emotional distress, damage to their credit scores and time lost from work for attorney meetings and foreclosure proceedings.
They also seek punitive damages and attorney fees as well as declaratory and injunctive relief dismissing the foreclosures of class members, with prejudice, declaring the mortgages and promissory notes of class members void and unenforceable` and rescinding or reforming the mortgages and promissory notes to conform to plaintiffs’ reasonable expectations.
The suit was brought by Lawrence Friscia, head of a Newark firm that counsels distressed homeowners, and his associate, Jonathan Minkove, who say they’ve found that Bank of America regularly negotiates binding agreements to modify mortgage terms and then fails to honor the terms.
The seven named plaintiffs are all New Jersey residents in danger of foreclosure, among them Jose Grullon of Passaic, N.J., whose binding arbitration agreement ending his foreclosure was ignored by Bank of America, and Tanya Beals of Roselle, N.J., who received a mortgage modification but was nonetheless found in default by Bank of America when she made mortgage payments at her new, reduced rate.
“There’s a difference in the fact pattern [among individual cases] but there’s pattern and a practice of blatant disregard for process,” says Minkove. “Any lawyer who’s worth his salt will tell you process matters.”
And when judges call them to case management conferences in their foreclosure cases, outside counsel for Bank of America regularly fail to show up, says Friscia. Worse still, New Jersey’s judges don’t seem to be bothered by such behavior, he says.
“There’s a shocking deference given to Bank of America on the part of the judicial system,” Friscia says.
In the firm’s negotiations on behalf of homeowners, the bank doesn’t bargain in ood faith, says Minkove. For example, the legal department will tell them to speak to the loss mitigation department, which will order them to send in send in documentation. They comply, but bank officials “regularly say they never received it. Therefore, part of what prompted us to action is [the realization that] this is a systemic problem. The left hand doesn’t speak to the right hand,” Minkove says.
A Bank of America spokesman in New York, T.J. Crawford, referred a reporter’s inquiry about the suit to other spokespersons in California, who did not respond to telephone and e-mail messages.
The case has been assigned to District Judge Katharine Sweeney Hayden.
New Jersey Law Journal