Bank of America mortgage modification class action lawsuit is a growing trend amongst borrowers who are tired of paying their mortgage interests. Bank of America is undoubtedly one of the most popular and well-known banks in the United States. Bank of America is notorious for foreclosing on properties that are unable to repay their mortgage or that prove to be unprofitable investments. It is no wonder then that many individuals, who have been depending on their income from their homes to pay off their mortgages, have been forced to file for bankruptcy. The problems associated with foreclosures have pushed up housing prices to all-time highs but as more Americans face foreclosure, the numbers of homeowners who are taking steps to save their homes are rapidly decreasing.
Bank of America Mortgage Modification Class Action Lawsuit
Bank of America has long been accused of acting like a bank, where people are pushed around like commodities. A Bank of America mortgage modification class action lawsuit is a legal claim that has been filed against the bank by a group of former homeowners who say that the bank has, among other things, illegally pushed people into adjustable rate mortgages which were unprofitable investments. Adjustable Rate Mortgages are risky investments because they can rise at any time without warning. If the mortgage loan gets pushed up too high, the lender has the right to foreclose on the property and sell it to recoup the losses. The lawsuit says that the bank pushed adjustable rate mortgages on people who could not afford them because they provided a low risk investment.
Bank of America, along with dozens of other financial institutions, has a system where they “adjust” the rate of interest based on the monthly gross income of an individual. The lawsuit claims that this is not a real loan, but rather a series of contracts, which were written by the bank with the agreement of the lender to adjust the mortgage loan at a profit over a certain period of time. The problem with this is that these loans often contain clauses which allow Bank of America to increase the interest rates beyond the original loan. Once the adjusted interest rate is reached, the homeowners no longer qualify for the mortgage loan, and Bank of America becomes the new owner of their home. They use the proceeds from the sale of the property to cover their own short-term and long-term loan servicing costs and to make up for the profits made on the adjustable rate mortgages.
The way that the bank of America uses these loans after they are adjusted is through the use of what is called “cash advance loans.” The bank makes a large down payment and guarantees that the homeowners will be able to make their payments. Then they use the funds from the sale of the home as their very own personal advance, with none of the limitations and costs that come with a bank owned property in foreclosure.
This seems like a very obvious thing to me. However, I have seen many people make the exact same mistakes that the government’s legal team is making in this class action lawsuit. One person even sent out fake financial statements to their own bank. Another person was told that their Bank of America loan would be exempt from any type of foreclosure abuse. These mistakes have cost innocent homeowners thousands of dollars, and they will cost the bank millions more if they are allowed to escape unscathed in this financial crisis.
Bank of America has also used illegal foreclosures in attempts to avoid their own loan servicing regulations being abused by their own employees. The bank’s own employees have intentionally instructed borrowers to skip loan servicing and engage in what is called “forbearance” or “impingement” of their rights to receive fixed rate mortgage loans. In both instances, the borrowers were then given notices stating that the borrowers had become delinquent and that they were being instructed to begin foreclosure proceedings against them. The class action lawsuit filed against Bank of America by the United States Attorney’s Office for the Southern District of New York is seeking judgments of damages against Bank of America, Countrywide Financial Corporation, and Countrywide Bank itself.