Arizona and Nevada Attorneys General Cite Mortgage Fraud in Suits Filed Against Bank of America

December 17, 2010

Arizona Attorney General Terry Goddard and Nevada Attorney General Catherine Cortez Masto have both announced that they have filed separate lawsuits against Bank of America Corporation and its affiliated companies (Bank of America) alleging violations of deceiving homeowners in both Arizona and Nevada.
Arizona AG Goddard's lawsuit, filed in Maricopa County Superior Court, was triggered by hundreds of consumer complaints and follows a year-long investigation into Bank of America’s residential mortgage servicing practices, particularly its loan modification and foreclosure practices. AG Goddard stated that Bank of America, one of the nation’s largest residential mortgage loan servicers, should be leading the way out of the country’s foreclosure crisis. Instead, he said, “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.”
Nevada AG Masto's suit, filed in the Eighth Judicial District of the State of Nevada, was triggered by consumer complaints that follow an extensive investigation into Bank of America’s alleged deceptive practices involving its residential mortgage servicing, particularly its loan modification and foreclosure practices.
"We are holding Bank of America accountable for misleading and deceiving consumers,” said Nevada AG Masto. “Nevadans who were trying desperately to save their homes were unable to get truthful information in order to make critical life decisions.”
AG Masto's complaint alleges that Bank of America is:
►Misleading consumers by promising to act upon requests for mortgage modifications within a specific period of time;
►Misleading consumers with false assurances that their homes would not be foreclosed while their requests for modifications were pending, but sending foreclosure notices, scheduling auction dates, and even selling consumers’ homes while they waited for decisions;
►Misrepresenting to consumers that they must be in default on their mortgages to be eligible for modifications when, in fact, current borrowers are eligible for assistance;
►Making false promises to consumers that their modifications would be made permanent if they successfully completed trial modification periods, but then failing to convert these modifications;
►Misleading consumers with inaccurate and deceptive reasons for denying their requests for modifications;
►Falsely notifying consumers or credit reporting agencies that consumers are in default when they are not;
►Misleading consumers with offers of modifications on one set of terms, but then providing them with agreements on different sets of terms, or misrepresenting that consumers have been approved for modifications.
The complaint filed by Goddard asks the court to hold the defendants in contempt for violating the consent judgment and to order them to pay restitution to eligible consumers and civil penalties, attorneys’ fees, and costs of investigation to the State. It further asks the court to order the defendants to pay up to $25,000 for each violation of the consent judgment and up to $10,000 for each violation of the Arizona Consumer Fraud Act.
AG Goddard noted that Arizona has been particularly hard hit by the foreclosure crisis, as evidenced by recent reports ranking the state second behind Nevada in foreclosures. 
“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,” said Arizona AG Goddard. “Our homeowners and communities need and deserve relief. Bank of America must be held accountable for its deceptive conduct and failed commitments.”
Both AGs contend that, as a result of Bank of America’s deceptive practices, many homeowners who were already contending with other financial hardships have been led to unnecessarily deplete their dwindling savings in futile attempts to obtain the promised relief and save their homes. Many homeowners who tried to obtain a modification from Bank of America ended up owing more principal on their loans or having less equity and becoming more “underwater” in their homes.
“Consumers turn to their banking or lending institutions for answers when faced with a life changing decision such as saving their home,” said AG Masto. “Bank of America’s callous disregard for providing timely, correct information to people in their time of need is truly egregious."
For more information, visit www.azag.gov or http://ag.state.nv.us.

Compliance, Originations, Residential, Servicing, Settlement