On March 23rd, in Washington State, homeowners filed a lawsuit in US District Court, against the Bank of America, for withholding funds from the government intended to aid homeowners facing impending foreclosure.
Banking giant, Bank of America, is accused of, intentionally, preventing Washington homeowners access to funds from the Troubled Asset Relief Program (TARP) by postponing requests to modify mortgages. In effect, BoA is denying borrowers of federal bailout funds which could, ultimately, save them from foreclosure.
Homeowners are also claiming their requests to work on remedies (such as mortgage adjustments) to avoid foreclosure, are flat-out ignored. Meanwhile, Bank of America basks in taxpayer supported, TARP funds; while receiving higher fees and interest rates, associated with stressed home loans.
All TARP funded financial establishments, like BoA, are required to offer solutions and services to foreclosure as well as reduce mortgage payments for those borrowers hit hardest, financially. The lawsuit claims Bank of America is not fulfilling this responsibility.
Additionally, TARP regulations clearly state, banks must gather information from the homeowner and offer a revised three-month payment plan for the borrower. When a homeowner makes all three payments according to plan, and provides necessary documentation and information, the lender must offer a permanent modification.
Not only is Bank of America accused of ignoring TARP regulations left and right, they have also charged homeowners fees, upfront, to modify their home loans—fees which are prohibited under the federal regulations of the Home Assistance Modification Program (HAMP).
Bank of America services over 1 million mortgages qualifying for financial relief, yet, have only granted 12,761 permanent modifications, according to the US Treasury Department.
Of course, everyone by now remembers Bank of America received $25 billion in bailout money from the government—which was all financed by taxpayers, in effort to save homeowners in avoiding foreclosure. Surprising as it is, the fact remains one in eight mortgages, presently in the United States, is in foreclosure or default.
At this time, one can only hope this case with Bank of America is more of an isolated incident and not a new trend within financial institutions.