Wrongful Foreclosures Work a Widespread and Devastating Injury on Borrowers, Residents and the Economy as a Whole

Wrongful Foreclosures Work a Widespread and Devastating Injury on Borrowers, Residents and the Economy as a Whole

By Daniel Edstrom
DTC Systems, Inc.

Thank you to Blaqrubi for this case.

The State of Nevada, through its Attorney General, Catherine Cortez Masto, filed this parens patriae lawsuit against Bank of America Corporation and several related entities (collectively, “Bank of America”) in Clark County District Court. Nevada alleges that Bank of America misled Nevada consumers about the terms and operation of its home mortgage modification and foreclosure processes, in violation of the Nevada Deceptive Trade Practices Act, Nev. Rev. Stat. §§ 598.0903-.0999. Nevada also alleges that Bank of America violated an existing consent judgment (“Consent Judgment”) in a prior case between Nevada and several of Bank of America’s subsidiaries, entered in Clark County District Court.

Defendants removed the case to Federal court, the state attempted to remand back to state court and was denied.  The state appealed and the 9th Circuit granted remand back to state court.

Foreclosures work a widespread and devastating injury not only to those borrowers who are defrauded, but also on other Nevada residents and the Nevada economy as a whole. Nevada has been particularly hardhit by the current mortgage crisis, and has a specific, concrete interest in eliminating any deceptive practices that may have contributed to its cause.

The Complaint alleges (among other things) that Bank of America has engaged in a pattern of misconduct in which it has and continues to:

  1. Mislead consumers with false promises that it will act on their modifications within a set period of time, but keeps them waiting for months, and sometimes more than a year, beyond the promised term;
  2. Mislead consumers with assurances that they will not be foreclosed upon while the Bank considered their requests for modifications.
    However Bank of America has sold the homes of some Nevada consumers and sent foreclosure notices to many more while their requests for modifications were still pending;
  3. Misrepresent to consumers that they must be delinquent on their loans in order to qualify for assistance, even though neither Bank of America’s proprietary programs nor the federal HAMP1 program requires that homeowners have missed payments;
  4. Mislead consumers with false promises that their initial, trial modifications would be made permanent if and when they made the
    required three payments on those plans, but then failed to convert those modifications;
  5. Tell consumers their modifications were denied for reasons that were untrue, such as that: (i) the owner of the loan refused to allow the modification when Bank of America had full authority to modify the loan without the investor’s approval; (ii) the Bank had tried unsuccessfully to reach the consumer, even though the consumer repeatedly called the Bank; (iii) the loan was previously modified when it was not; (iv) the borrower failed to make trial payments, when they made all payments; and (v) the borrower was current on his or her loan, when delinquency is not a condition of a modification;
  6. Falsely notify consumers or credit reporting agencies that consumers are in default when they are not;
  7. Mislead consumers with offers of modification on one set of terms, and then provide agreements with materially different terms, or
    inform consumers that their modifications had been approved, but then tell them that their requests were denied, often months before.

Take note of this quote which is what the author of this blog has been saying for years:

Falsely notify consumers or credit reporting agencies that consumers are in default when they are not

 Download ruling here: http://dtc-systems.net/wp-content/uploads/2012/03/9th_Circuit_Nevada_AG_Decision.pdf

Download the complaint here: http://dtc-systems.net/wp-content/uploads/2012/03/State-of-Nevada-vs-Bank-of-America_Complaint.pdf

Download Exhibit A to the complaint here: http://dtc-systems.net/wp-content/uploads/2012/03/State-of-Nevada-vs-Bank-of-America_Complaint_Exhibit_A.pdf

Download Exhibits B, C and D to the complaint here: http://dtc-systems.net/wp-content/uploads/2012/03/State-of-Nevada-vs-Bank-of-America_Complaint_Exhibits_B_to_D.pdf

Download Exhibits E, F, G, H, I, J, K, L, M, N, O and P to the complaint here: http://dtc-systems.net/wp-content/uploads/2012/03/State-of-Nevada-vs-Bank-of-America_Complaint_Exhibits_E_to_P.pdf