Three fascinating Fraudclosure related items: Bank of America Sued in Class Action Over Flouting of Foreclosure Rules

Bank of America has been hit with a class action on behalf of homeowners seeking damages for alleged disregard of foreclosure process rules.

The suit, filed Wednesday in federal court in Newark, N.J., accuses Bank of America and two subsidiaries, LaSalle Bank and BAC Home Loans Servicing, of “an undisciplined rush to seize homes” through “pervasive and willful disregard of knowledge, facts and statutes.”

Bank of America has filed foreclosure proceedings on many mortgages in New Jersey without holding the necessary rights as the mortgagee or assignee at the time of foreclosure, the suit says.

“Many thousands of foreclosures are plainly void under statute and settled New Jersey case law. Many borrowers never obtain statutorily required notices, and many foreclosure suits are filed entirely based in inaccurate recitations concerning ownership of the mortgage, the note, or the assignment,” the suit says.

The putative class in the suit, Beals v. Bank of America, N.A., 10-cv-05427, consists of all named defendants in pending New Jersey foreclosure actions initiated by Bank of America or its affiliates. The complaint includes counts of common-law fraud, breach of the covenant of good faith and fair dealing and violations of the New Jersey Fair Foreclosure Act and Consumer Fraud Act.

Macro Index:

Courts are hurriedly catching up to the changes technology and financial innovation have brought to mortgage and equity law. The new rules adhere to an established legal tradition that slows the pace at which cases can be brought to trial. This is a good thing 99% of the time as civil and criminal trial processes are designed to terminate cases before they ever reach the courtroom. Trials are expensive. Settling cases before trial will save the plaintiffs, defendants and taxpayers significant sums of money. Template New York Courts First in Country to Institute Filing Requirement to Preserve Integrity of Foreclosure Process

(PDF after the jump)

Category: Foreclosures

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

19 Responses to “BofA Hit with Fraudclosure Class Action Suit”

  1. Winston says:

    One item that escaped me when researching this piece: Foreclosure rules vary from state to state. But New York is different because the major banks locate their corporate headquarters there. Since the FRBNY also has jurisdiction in banking affairs – could the NY Fed abridge the new foreclosure regulations?

  2. VennData says:

    So, Little People, how do you feel about Lawyers now? Like it now that they’re on your side?

    Or do you still buy the GOP line to diminish them, so that the powerful can trample on the weak?

  3. hammerandtong2001 says:

    NY State:

    Attorney and firm personally and directly accountable under perjury. Attorneys submitting false documents are personlly liable. And with a headline issue, only those airtight w/ note affixed move ahead.

    The banks created an issue that is “Too Big To Ignore” — every other state requiring judicial review will follow suit — 23 states are in pit stop mode. The remainder will follow along.

    Housing backlog just stretched out to a decade or so.

    Oh yes, just to make it all really interesting: an avalanche of MBS putbacks is tumbling down the mountain now…

    They paid idiot 28-yr old bond salesmen $2 million/yr to move this crap to the next sucker. Where’s the clawback?


  4. BofA Finds Foreclosure Document Errors

    Bank of America Corp. for the first time acknowledged finding some mistakes in foreclosure files as it begins to resubmit documents in 102,000 cases.

    The Charlotte, N.C., lender discovered errors in 10 to 25 out of the first several hundred foreclosure cases it examined starting last Monday. The problems included improper paperwork, lack of signatures and missing files, said people familiar with the results. In certain cases, information about the property and payment history didn’t match.

    Some of the defects seem relatively minor, according to the bank, and bank officials said they haven’t uncovered any evidence of wrongful foreclosures. There was an address missing one of five digits, misspellings of borrowers’ names, a transposition of a first and last name and a missing signature on one document “underlying” an affidavit, a bank spokesman said.

    But the bank uncovered these mistakes while preparing less than 1% of the first foreclosure files that it intends to resubmit to the courts in 23 states. As the nation’s largest mortgage lender, the bank is under pressure to show that its mortgage process isn’t flawed amid revelations that many banks used “robo-signers” to approve large numbers of foreclosure documents without reading them closely.

    State and federal agencies launched investigations into the allegations, and some officials, including Iowa’s attorney general, said they wouldn’t necessarily trust the banks’ self-assessments.

    Several statements from bank officers about foreclosure practices have come under scrutiny. Wells Fargo & Co. Chief Executive John Stumpf on Oct. 20 said: “I don’t know how other companies do it, but in our company the affidavit signer and the reviewer are the same team member.” Days later a deposition emerged from a bankruptcy case indicating that Wells Fargo had in fact used a robo-signer who didn’t verify documents she approved.

    A Wells Fargo spokeswoman said “we don’t believe any of those cases or depositions should be taken out of context. If we find some errors and need for improvements we will take that action.”

    Bank of America in several recent public comments about the foreclosure issue hadn’t previously acknowledged even minor errors. Yet last week it uncovered a group of mistakes as it prepared to resubmit the first batch of documents and shared the information internally, according to people familiar with the matter. Executives are briefed twice daily about what was found.

    When the bank announced Oct. 18 that it would lift a freeze on foreclosure sales in 23 states, it emphasized the accuracy of its internal review. “Our initial assessment findings show the basis for our foreclosure decisions is accurate,” the company said in a statement.

    That conclusion, it turns out, was based on an earlier sample of fewer than 1,000 files. The bank found no mistakes in the sample, a spokesman said, but it decided to make changes to its affidavit approval procedures before going through all 102,000 cases. Now, for example, a notary will sit next to the signer of the affidavit as the documents are being reviewed.

    The day after the bank began its comprehensive review of all documents, CEO Brian Moynihan told analysts on an Oct. 19 conference call that “the teams reviewing the data have not found information which was inaccurate, which would affect the plain facts of the foreclosure” such as whether the customer was actually delinquent on the loan. The errors uncovered so far support Mr. Moynihan’s statement, bank officials said, and all mistakes are being corrected before the bank resubmits documents to the courts.

  5. louis says:

    Lawyers will have to do what government cant, until the lawyers need a bailout.

  6. jad714 says:

    Bank of America also has a disregard for refunds. I’m in a deficit because of their slow action.

  7. Maseratij says:

    @VennData It is good, and I am happy that your happy being a lawyer. I don’t need no stinkin’ lawyer. The only reason you can come out from under your rock is by using the stench of bankers for your cover. You sir are no defender of us “little people”.

  8. It is about time. I was beginning to think something like this was never going to happen. It serves them right for not only stripping the carcass (the bailouts) but then coming back for the bones (foreclosure). There are just some things that the market abhors. As the old saying goes: Bears get fed, bulls get fed but hogs get slaughtered. They should have shown grace when they walked out of the rigged casino with everyone’s money. The problem was that they had a parking ticket on their windshield and wanted that fixed too

    These guys should have quit while they were ahead but they had to rub it in the noses of those with nothing else to lose. Never, ever dance on a gravestone. You’ll only provoke the freshly dead

  9. @VD,

    So, Little People, how do you feel about Lawyers now? Like it now that they’re on your side?


    They are not on the side of the little people. They go where the money is. As for your question:

    They are the best (probably because they are the most expensive) instruments in the world for scraping the scum off your feet. LOL!

    (hmmm, debating if I should hit send or not)

  10. Julia Chestnut says:

    Thing is, that quote is wrong — the law doesn’t change fast. Not even when the Supreme Court comes out with some radically altered pronouncement, and overnight things change going forward: it took years for that case to wind its way up to that point.

    So the “rapid changes in law wrought by technology,” I’m paraphrasing, is rank wishful thinking. The technology changed the procedures, but it most assuredly did NOT change the law. It was hubris on the part of the banks to think that it did. They just broke the law and didn’t worry about it, because they expected to clean up the details along the way. They are still pushing to get someone to say that the sheer weight of their intransigence should create how taking property should be done – because it would be so inconvenient to require them to follow the law.

    NOW: whether those getting trampled will have access to the law, that is another matter. But if the courts ignore the law now, because it suits the powerful, it will be a long, ugly lurch further down the path to being third world.

  11. rktbrkr says:

    Banks prefer foreclosures to short sales, BOA example. (Maybe the banks want to take recourse to other assets after FC and couldn’t do that with short sales?)

  12. Robert M says:

    Do not stop pointing out that this situation is undermining the rule of law. Much of the credit bubbles excesses(yes I recognize that this is an oxymoron) was precipitated because there was no law to reign them in or nonfeasance.

  13. Lugnut says:

    “So, Little People, how do you feel about Lawyers now? Like it now that they’re on your side?

    Or do you still buy the GOP line to diminish them, so that the powerful can trample on the weak?”

    Well, it is comforting to know that they will at least strap on their Cape of Righteous Retribution and take on the Evil Doers once the retainer check clears into the firm’s account.

  14. Jack says:

    @Julia Chestnut:

    You’re absolutely right.

  15. willid3 says:

    Yves Smith on foreclosure mess

    while we may complain (or like to ) about lawyers and the government. at least some of the time they are on the peoples side.

    as opposed to wall street, IBANKS, banks and finance companies.
    and business in general.
    none of them are every on the people’s side. they are always with out exception on their side. if in some remote way that should happen to coincide with your side (which could happen in a parallel universe) it would make the news. as a once in a million years event

  16. Winecountrycop says:

    Whoo hoo…good to see some movement (finally)…a couple more thoughts to share. Check out: Great parallel with recent Golds Gym fiasco here in Bay Area…people could do the same with banks – when people and orgs pull money out B of A gets smaller. Also, what about the recent testimony before Congress where these same people testified under oath that “all was being done that could be”. Given recent allegations by Tam Doan this is not true.