Arizona sues Bank of America over loan modifications

The Bank of America logo as seen outside a bank in San Jose, Calif.

Bank of America could conceivably be paying for the mortgage loan modification mess for decades. (Photo Credit: CC BY-SA/Michael Gray/Flickr)

Waiting for mortgage loan modifications that banks fraudulently promised has thrown thousands of American families into foreclosure. Bank of America, perhaps the nation’s worst offender, has been a target of the Federal Reserve because of mortgage bonds for a while, and now the State of Arizona is stepping in on behalf of its homeowners. The Associated Press reports that state Attorney General Terry Goddard has filed a civil lawsuit against Bank of America for what he claims is multiple violations of consumer fraud law by “misleading consumers” who are seeking mortgage loan modification.

B of A lied to mortgage loan modification customers

Reports indicate that despite a string of assurances that the mortgage loan modification would go off without a hitch – a string of assurances that would last many months – Bank of America still foreclosed on hundreds of Arizona homes. Throughout the waiting period, many homeowners whose mortgages were underwater continued to make payments, only to find later that B of A had lied and would not grant a mortgage loan modification. Foreclosure was the next nasty step.

“Those people could have used that money for something else,” Arizona Attorney General Terry Goddard told the AP. “They were deceived into continuing to make mortgage payments when they had no hope of saving their homes.”

Consumer complaints spurred Goddard to action

After receiving a massive number of complaints from Arizona residents regarding Bank of America’s mortgage loan modification practices, Attorney General Goddard took action more than a year ago. There had been talk of a settlement dating back to April, but those talks dissolved yesterday. Today, the State of Arizona has filed suit against Bank of America in Maricopa County Superior Court. According to Goddard, the State of Nevada is expected to file a similar lawsuit.


Associated Press

A tale of B of A mortgage loan modification woe

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