Attorney General Catherine Cortez Masto on Friday said her office filed a lawsuit against Bank of America, seeking a court order to stop the giant bank from continuing to use deceptive trade practices against homeowners.
The lawsuit seeks a declaratory judgment that Bank of America violated the Nevada Deceptive Trade Practices Act, an order prohibiting it from continued violations and an unspecified amount civil penalties and restitution.
"We share Attorney General Masto's goal of helping homeowners," Dan Frahm, senior vice president at Bank of America Home Loans, said in a statement.
Bank of America is disappointed by the lawsuit and a similar one filed by Arizona Attorney General Terry Goddard, because Bank of America and other mortgage loan servicers are cooperating in multistate discussions "to try to address foreclosure related issues more comprehensively," he said.
"We are already under way with further improvements to our processes and programs for Bank of America customers," Frahm said.
The lawsuit filed in Clark County District Court alleges that Bank of America misled consumers with false assurances that their homes would not be foreclosed while loan modification requests were pending, then foreclosed on the homes.
Bank of America also has promised consumers that temporary modifications would be made permanent but failed to do so, according to the complaint.
The lawsuit accuses the bank of misinforming homeowners that they must be in default on their mortgages to get a modification when borrowers current on loan payments may qualify for modifications. In some cases, consumers were offered one set of modification terms but given different modification terms, according to the complaint.
The lawsuit claims that bank workers repeatedly postponed action on loan modification applications, lost documents and gave false reasons for denying modifications.
"I think it's a callous disregard for providing timely and correct information to people in their time of need," Masto said. "They have been dragging this out for some borrowers for over a year."
Bank of America should give borrowers "immediate, honest and fair answers so they can make a decision about their future with respect to their home."
Bank of America's failure to resolve mortgage loan modification cases promptly and fairly has helped spawn scam mortgage loan modification firms that are taking advantage of people desperate to save their homes, Masto said.
Masto said her office has been unable to negotiate a resolution of the allegedly abusive practices over the past 18 months.
Attorney Tisha Black Chernine, who represents homeowners in home mortgage disputes with lenders, said the lawsuit has merit. She said the allegations in the Bank of America lawsuit are similar to problems she has encountered with other large banks.
Contact reporter John G. Edwards at email@example.com or 702-383-0420.