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Bank of America stole $907 million from taxpayers by falsely certifying loans as compliant with federal law, lawsuit says


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(NaturalNews) A new lawsuit filed in federal court claims that Bank of America falsely certified its home modification loans as compliant with federal rules, in a bid to reap in excess of $907 million in government incentive payments.

As reported by Courthouse News Service, in his suit filed under the False Claims Act, Michael J. Fisher of Southlake, Texas, alleged that he worked for four years -- 2008 through 2012 -- assisting attorneys in securing mortgage loan modifications for their homeowner clients.

His complaint, filed under seal in Manhattan Federal Court in March and unsealed just this month, claims he reviewed hundreds of loan modification contracts from Bank of America and other lenders. He said that he noticed a pattern of violations of the Truth in Lending Act.

As further reported by Courthouse News Service:

Specifically, he claims, Bank of America consistently failed to inform the borrowers of their right to rescind their request for a loan modification.

Section 1635 of the TILA "requires notice of the borrower's right to rescind consumer credit transactions in which a security interest is retained or acquired in property that will be the borrower's principal dwelling, until midnight of the third business day after consummation of the transaction or delivery of the TILA rescission forms, whichever is later," the complaint states.


Hid non-compliance with federal rules

Continuing, the complaint says: "Written acknowledgement of any required TILA disclosure creates only a rebuttable presumption of delivery. Refinancings with no new advances, but the same creditor and secured by the same property, and certain other transactions are exempted from the rescission provisions."

Added Fisher in his complaint, "The actionable conduct alleged as unlawful herein involves transactions which were not exempted from the rescission provisions."

Fisher's primary concern appears to be those loans in which "new money" is advanced to consumers. He said that, in those cases, the amount of new money is rescindable, and in those cases, Bank of America and other creditors must provide consumers with two copies of a notice of a right to rescind, or overturn, "which must be a separate document clearly and conspicuously disclosing the rights and process of rescission."

"Unless the consume[r] waives the right to rescind, which is permitted only in limited circumstances, no money shall be disbursed, other than in escrow, no services shall be performed, and no materials shall be delivered unless and until the three-day period passes without the right of rescission being exercised," Fisher said in the complaint.

Following the onset of the Great Recession and global financial crisis in 2007-2008, the federal government created the Home Affordable Modification Program, which was designed to encourage banks and other financial lenders to modify home-secured loans.

Under the program, known as HAMP, lenders, owners of loans and borrowers all receive incentive payments from the federal government, as part of the granting of each modification and for keeping modified payments current. Foreclosures were becoming rampant, and HAMP was seen as a way to stem those as much as possible, keeping people in their homes.

As noted by Courthouse News Service:

In addition to the initial incentive payment, lenders could also receive "Pay for Success" incentives of up to $83.33 per month.

BOA settling other cases too, for billions

"Thus, servicers may, post-October 1, 2011, be paid up to $4,600 for a permanent HAMP loan modification that continues in good standing for thirty-six (36) consecutive months ($1,600 for modification plus $3,000 maximum for total good standing payments.)," Fisher said.

In his complaint, Fisher claimed that, in order to participate in the payment program, Bank of American falsely certified that it was in full compliance with government regulations -- federal, state and local -- and, by extension, the rules governing HAMP.

In a non-related story, Bank of America has also agreed to settle a myriad of lawsuits related to lending practices that wound up costing investors billions during the housing crisis and Great Recession.

In announcing the record $17 billion settlement, U.S. Attorney General Eric Holder said that "when confronted with concerns about their reckless practices -- bankers at these institutions continued to mislead investors" and approve "loans with fundamental credit, compliance and legal defects."

Sources:

http://www.courthousenews.com

http://www.vnews.com

http://www.naturalnews.com

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