Is Bank of America Now Attempting to Evade Its Obligations to Help Consumers?
Nearly one year ago, Bank of America reached a settlement with the U.S. Department of Justice pursuant to civil charges the Department of Justice had filed against the giant bank based on how it structured mortgage-backed securities. Bank of America agreed to pay almost $17 billion in penalties, with $7 billion of that amount designated for consumer relief–loan forgiveness, loan modification, principal reduction, and other measures. The settlement was touted by the Justice Department as a great step forward in bringing relief to consumers who found themselves underwater with their mortgages. However, this appears not to be the case, now that Bank of America has begun to take measures that are allegedly an effort to comply with this settlement.
Bank of America is required, under the terms of the settlement, to prove within the four years following the settlement that it has either forgiven or reduced $7 billion of the balance of its debtors’ loans. For any dollar amount of debt forgiven before August 31, 2015, the bank will receive more than $1 worth of a reduction in the $7 billion, as an incentive to act quickly. As a result, Bank of America has issued a flurry of letters to current or former customers which alleges to forgive debt—despite the fact that this debt was already forgiven in the course of a bankruptcy claim. Bank of America has been stating in these letters that the full balance of those loans were generously forgiven pursuant to the August 2014 settlement. These letters have left many recipients baffled, since they believed that those amounts were already forgiven, and Bank of America no longer had a right to seek payment for these loans. Bank of America defends their behavior by stating that, in case of a home equity loan extinguished in bankruptcy, the bank still has a second lien on the property on which it technically could collect. A Bank of America spokesperson clarified that the bank would only count 40% of such forgiven loan amounts toward the $7 billion it must forgive. However, the National Consumer Law Center stated in response that banks rarely if ever are able to recover under second liens, and that claiming that it could have collected 40% on such loans is not realistic or fair. One consumer bankruptcy attorney reported that seven of his clients whose debt had been forgiven in bankruptcy had reported receiving such letters, totaling over $700,000 in forgiveness that may be counted in some part against the $7 billion settlement.
Don’t let your mortgage or consumer debt get out of control. Legal assistance is available to help you. Contact the skilled consumer law and bankruptcy attorneys at Haeger Law, LLC, for expert assistance on your claims. Our compassionate Maryland attorneys are available to provide a free consultation on your possible claims in Germantown, Maryland, as well as throughout Damascus, Monrovia, Gaithersburg, Barnesville, Prince George’s County, and Howard County.