A group of California homeowners is suing Bank of America, alleging that the national lender is intentionally withholding government funds intended to stave off foreclosures.
The case has been filed in the U.S. District Court in Northern California; a similar lawsuit was filed in Washington state last month by the same law firm handling the California suit (not ours).
According to a report on the suit by RealEstateRama California:
Bank of America accepted $25 billion in government bailout money financed by taxpayer dollars earmarked to help struggling homeowners avoid foreclosure. One in eight mortgages in the United State is currently in foreclosure or default.
Bank of America, like other TARP-funded financial institutions, is obligated to offer alternatives to foreclosure and permanently reduce mortgage payments for eligible borrowers struck by financial hardship but, according to the lawsuits, hasn’t lived up to its obligation…
Bank of America continues to ignore TARP regulations and instead creates more financial pressure on homeowners, the court filing states.
The lawsuits charge that Bank of America intentionally postpones homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by taxpayer dollars financing TARP-funds and also collects higher fees and interest rates associated with stressed home loans.