This is just up, from the New York Times' Gretchen Morgenson. Not surprisingly, Bank of America--one of the truly despicable actors in the mortgage scandal--has violated a deal it struck with the state of Nevada. And Nevada wants to sue.
Here you go:
The attorney general of Nevada is accusing Bank of America of repeatedly violating a broad loan modification agreement it struck with state officials in October 2008 and is seeking to rip up the deal so that the state can sue the bank over allegations of deceptive lending, marketing and loan servicing practices. In a complaint filed Tuesday in United States District Court in Reno, Catherine Cortez Masto, the Nevada attorney general, asked a judge for permission to end Nevada’s participation in the settlement agreement. This would allow her to sue the bank over what the complaint says were dubious practices uncovered by her office in an investigation that began in 2009.
In her filing, Ms. Masto contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending and failed to meet the settlement’s 60-day requirement on granting new loan terms, instead allowing months and in some cases more than a year to go by with no resolution, the filing says.
The complaint says such practices violated the settlement Bank of America reached in the fall of 2008 with several states and later, in 2009, with Nevada that had accused its Countrywide unit of predatory lending. As the credit crisis grew, the settlement was heralded as a victory by state offices eager to help keep troubled borrowers in their homes and reduce their costs. Bank of America set aside $8.4 billion in the deal and agreed to help 400,000 troubled borrowers with loan modifications and other financial relief, such as lowering interest rates on mortgages.
The depth of the breach is breathtaking:
For example, the complaint says the bank advised credit reporting agencies that consumers were in default on their mortgages when they were not, and contends that Bank of America employees deceived borrowers about why their requests to modify loans were denied. In addition, it says, the bank falsely claimed that the actual owners of loans had refused to allow changes to their mortgages, and it incorrectly claimed that borrowers had failed to make payments on trial loan modifications when in fact they had. Bank of America also misled borrowers, the Nevada attorney general’s filing noted, by offering loan modifications with one set of terms only to come back with a substantially different deal.
Among the more troubling findings in the Nevada complaint is the contention by several Bank of America employees that the company imposed strict limits on the amount of time they could spend on the phone assisting troubled borrowers seeking help with their loans. [emphasis added]
And, now, it makes it even more clear why the New York State Attorney General refuses to cave to the Obama Administration's demand, and won't cave despiteunethical behavior on the part of a director of Federal Reserve Bank of New York, to get with the program and sign a bad deal that bars future action:
Attorneys general who do not want to give up the right to file additional suits against the banks — including Ms. Masto, Eric Schneiderman of New York and Beau Biden of Delaware — have declined to endorse a proposed settlement.
UPDATE 8-31-11 9:38 EST:
Nevada isn't theonly new twist--
On Tuesday, several homeowners filed suit in Federal District Court in Manhattan, seeking to block a proposed $8.5 billion settlement between Bank of America and major mortgage investors, including BlackRock, Pimco and the Federal Reserve Bank of New York. The suit says the deal fails to address widespread servicing problems and would actually speed up foreclosures.
In a separate new case, U.S. Bancorp, the trustee of a $1.75 billion mortgage pool originated by Countrywide Financial in 2005, sued to force Bank of America to buy back the underlying mortgages, arguing that the loans were made without proper documents and did not conform to underwriting standards.
And:
The Federal Housing Finance Agency, which oversees the mortgage giants Fannie Mae and Freddie Mac, on Tuesday filed a “conditional objection” to the $8.5 billion settlement, one day after the Federal Deposit Insurance Corporation made a similar move. Smaller investors have already filed legal actions opposing the deal, as has the New York state attorney general, Eric T. Schneiderman.
“There is a growing realization that this settlement needs more scrutiny,” said Keith Fleischman, the lawyer for the four homeowners in the suit. “It needs to address the housing crisis itself.”
Wed Aug 31, 2011 at 6:40 AM PT: See update above (If I knew how to blockquote etc using the automatic update, would have).