BofA's ReconTrust Settles Charges - Analyst Blog

By
A A A

On Thursday, Bank of America Corporation 's ( BAC ) foreclosure division - ReconTrust Co. - settled charges made by Washington State Attorney General, Rob McKenna. The charges were filed on the grounds that ReconTrust failed to comply with the state laws of Washington.

McKenna claimed that this division was futile in the role of an unbiased third-party, acting on the interests of both lender and borrower. Moreover, it did not have an office in the state of Washington.

In addition, it failed to identify the actual loan owners and provided conflicting information to the borrowers regarding the methods to stop foreclosures. To resume its discontinued business in the state, the company will have to fulfill the conditions laid down to safeguard the interests of the homeowners.

Texas-based ReconTrust is a foreclosure trustee services provider in California, Texas, Arizona, Nevada, Virginia and seven other states.

Earlier this year, five large U.S. banks - JPMorgan Chase & Co. ( JPM ), Bank of America Corporation ( BAC ), Citigroup Inc. ( C ), Ally Financial Inc. and Wells Fargo & Company ( WFC ) - accused of faulty foreclosure practices, agreed to a $25 billion settlement deal. Under this settlement, Bank of America had the largest financial commitment of $11.8 billion. Out of this amount, ReconTrust has already paid a sum of $1.1 million.

Even though it will take awhile to fully overcome the foreclosure mess, this settlement is a step forward. We believe that various corrective measures would surely prevent yet another foreclosure crisis, if these are implemented correctly.

Bank of America currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term Neutral recommendation on the stock


 
BANK OF AMER CP (BAC): Free Stock Analysis Report
 
CITIGROUP INC (C): Free Stock Analysis Report
 
JPMORGAN CHASE (JPM): Free Stock Analysis Report
 
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BAC , C , JPM , WFC

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

67,310,517
  • $100.53 ▲ 1.38%
50,893,843
  • $8.02 ▲ 2.56%
48,783,882
  • $10.25 ▲ 3.85%
43,859,280
  • $5.39 ▼ 4.09%
41,392,452
    $15.45 unch
31,440,620
  • $8.09 ▲ 3.45%
30,705,588
  • $3.11 ▲ 0.97%
28,829,509
  • $3.87 ▲ 19.44%
As of 8/19/2014, 04:03 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com