Bank of America settles lawsuit with state over mortgage redos

Bank of America Corp., aside from the nationwide foreclosure deal, has settled a separate lawsuit over mortgage modifications brought by Nevada for almost
$800 million, state Attorney General Catherine Cortez Masto said Friday.

The case is not part of the $25 billion multistate accord that Bank of America and four other large banks reached with the federal government, Nevada and 48 other states regarding abusive foreclosure practices stemming from the housing collapse.

Masto said the agreement requires the nation's second-largest bank to set aside $750 million for lien reductions and short sales. The bank will pay $30 million to the state for consumer protection efforts.

At a news conference in Las Vegas, Masto said the deal also mandates that the bank suspend foreclosure sales for any borrower eligible for a mortgage loan modification program.

Masto's office sued Bank of America in December 2010 to undo an agreement over home loan modifications tied to the bank's Countrywide Financial Corp. unit, alleging the lender failed to meet its obligations. The case was being litigated in federal court in Reno.

"We believe this settlement will help provide additional support for
homeowners who need assistance, brings more certainty to the housing market and aligns to our ongoing commitment to help rebuild our neighborhoods and get the housing market back on track," Bank of America spokesman Rick Simon said in a statement.

In October 2008, Masto reached an agreement with Countrywide Financial to settle allegations of fraud in mortgage origination and servicing.

In August, Masto's office filed an amended complaint seeking to terminate the settlement, arguing the bank and its subsidiary violated the agreement by failing to modify loans for eligible homeowners.

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.