U.S. District Judge rejected the class action lawsuit against
Bank of America Corporation
) - the second largest U.S. Bank. The class action lawsuit had
alleged that BofA instead of assisting the troubled homeowners in
modifying the loans to which they were entitled forced them
toward a foreclosure.
This is a 3-year old case wherein a class action lawsuit against
BofA was filed by 43 individuals and couples belonging to 26 U.S.
states. However, the U.S. District Judge, Rya Zobel rejected the
plea against BofA stating that the claims made by the plaintiff
were too diverse to permit class action.
The verdict by the U.S. Judge is a setback for the homeowners who
accused BofA of not complying with the Home Affordable
Modification Program (HAMP). HAMP is a federal program, which was
introduced in 2009 with the aim of providing incentives to
mortgage servicers in an attempt to persuade them with loan
modifications and thereby assisting them to keep their homes.
The plaintiffs accused BofA of failing to administer its HAMP
modifications efficiently. They claimed that the bank in several
cases stated that it had misplaced the documents. Further, the
bank sometimes either claimed to have not received the required
documents from the homeowners or randomly deprived its customers
of permanent modifications.
Presently, several mortgage lawsuits faced by BofA are due to its
acquisition of Countrywide Financial Corp. BofA acquired
Countrywide Financial in 2008 for $2.5 billion, which turned out
to be a sour investment for the company. The acquisition
heightened BofA's expenses due to litigations, loan repurchases
and mortgage expenditure. In fact, a number of lawsuits are still
pending in court, most of which are related to the sale of MBS by
Apart from BofA, many other U.S. banks including
Wells Fargo & Company
JPMorgan Chase & Co
) are encountering similar lawsuit charges.
BofA currently carries a Zacks Rank #3 (Hold).
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
To read this article on Zacks.com click here.