Posted on Thursday, March 25, 2010
Homeowners in Washington State are suing Bank of America, alleging the nation’s largest lender is “intentionally” and “systematically” thwarting and ignoring borrowers’ requests to make reasonable mortgage modifications that would prevent homes from being foreclosed.
The case, filed in a Seattle federal court, claims that Bank of America is required to modify troubled mortgages as a condition of the $25 billion federal bailout it accepted as part of the Troubled Asset Relief Program (TARP)
alleging Bank of America is acting contrary to the intent and spirit of the TARP program, and is doing so out of financial self interest. That Bank of America has made an affirmative decision to slow the loan modification process for reasons that are solely in the bank’s financial interests.
The complaint notes that part of Bank of America’s income is based on loans it services for other investors, fees that will drop as loan modifications are approved. The complaint also notes that Bank of America would need to repurchase loans it services but has sold to other investors before it could make modifications.