Lawsuit: Bank of America Rejects Mortgage Modification Agreements for ‘Bogus Reasons’

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A Virginia couple’s proposed class action lawsuit alleges Bank of America, N.A. fails to honor agreements with mortgage borrowers to modify their loans to prevent foreclosure for a variety of “bogus reasons,” which include, the case says, a notary failing to write his or her middle initial on financial documents. The lawsuit claims that despite Bank of America agreeing to a permanent loan modification with the plaintiffs and accepting the modified payments, the bank’s practice of improperly rejecting borrower’s modified agreements has led to wrongful foreclosures and other highly adverse actions taken against proposed class members.

“Bank of America has routinely failed to honor its end of the process and finalize permanent modifications to homeowners,” the lawsuit claims. “Instead, after a consumer’s successful completion of a [trial period plan], Bank of America mails the homeowner a permanent loan modification. After the homeowner signs and returns the agreement and makes the first modified payment, Bank of America rejects the modification for a myriad of impermissible and implausible reasons, including so-called ‘improper’ notarization of the permanent loan modification agreement.” 

The plaintiffs allege that theirs and proposed class members’ mortgage loans, insured by the Federal Housing Administration (FHA), stipulated a “face to face meeting” between the plaintiffs and Bank of America as a condition precedent for any foreclosure action. The case alleges Bank of America did not attempt to conduct these mandatory face-to-face meetings with proposed class members before foreclosing on their homes in violation of federal requirements.

“By failing to honor the permanent modifications, Bank of America is preventing homeowners from pursuing other avenues of resolution, including using the money they paid toward [TPP] payments to fund bankruptcy plans, relocation costs, short sales, or other means of curing their default,” the complaint asserts.