Posted on Monday, April 4, 2011
A group of Bank of America Corp. shareholders filed suit Monday against the bank over its foreclosure paperwork practices. The suit was filed in the N.Y. Supreme Court in Manhattan.
The Charlotte-based bank (NYSE:BAC) “did not properly record many of its mortgages when originated or acquired, which severely complicated the foreclosure process when it became necessary,” the suit states, according to Bloomberg.
The shareholders also contend the bank concealed its staffing was insufficient to process the huge volume of foreclosed loans in its portfolio.
The shareholders say the mortgage problems contributed to a 42 percent decline in stock price after the problems were disclosed. The shares were trading at $19.48 on April 15 and bottomed in late November at $11.16.
BofA declined to comment.
The bank ranks second in deposits in South Florida at $23.11 billion with 206 locations, according to the South Florida Business Journal's 2011 Book of Lists.
The bank temporarily froze foreclosures Oct. 2 after reports that lenders were approving foreclosures without proper review of paperwork. The bank restarted foreclosures after an internal review.
The suit accuses the bank’s leadership of breaching fiduciary duty, wasting corporate assets and mismanagement, Bloomberg reports.
The lawsuit is the latest development in a foreclosure crisis that has caused BofA much heartburn. Since buying mortgage lender Countrywide Financial Corp. in 2008, BofA has diverted thousands of employees to work with distressed homeowners and bad mortgage loans. BofA has also written off billions of dollars in mortgage-related assets. It faces requests from investors asking the bank to buy back soured mortgage securities and is prepared for legal expenses this year up to $1.5 billion.
In January, a dozen institutional investors, including TIAA-CREF Life Insurance Co. and New York Life Insurance Co., filed a complaint alleging fraud in mortgage-backed securities involving BofA's Countrywide unit.
BofA incurred a loss of $3.6 billion in 2010.
South Florida Business Journal