5 Ways Bank of America Is Avoiding Mortgage Servicer Settlements

A few weeks ago, it came to light that Bank of America (BoA) was abusing HAMP modifications and throwing people into foreclosure for profit. Recently, news about BoA emerged again. This time, it’s how the megabank is trying to evade the mortgage service settlements it has entered into with the federal and state governments. Here’s what it’s doing.

  • Megabanks are leaving the mortgage servicing industry, and they’re being replaced by a wave of lesser-known companies that never originated any mortgages and don’t plan to. These companies are not party to any of the settlements, so they aren’t required to adhere to the kinds of practices BoA has promised to. Examples include Nationstar, Ocwen, and Green Tree Servicing.
  • Boa is now selling its subprime mortgages to these servicers, so in exchange for cash and a cut of the profits, BoA effectively does not need to adhere to the settlements it has agreed to. In fact, in January, it sold Green Tree 650,000 in mortgages worth $93 billion.
  • Although these servicers are under investigation by the Consumer Financial Protection Bureau, they are generally not subject to much oversight by government regulators.
  • Meanwhile, non-bank servicers like Green Tree are notorious for poor service and abusive practices. They regularly violate the Fair Debt Collection Practices Act and the Telephone Consumer Protections Act by calling debtors at unauthorized hours, charging illegal fees, failing to process payments on time, and delaying or denying valid modifications. In short, they do all the kinds of things BoA can no longer get away with.
  • One serious consequence for homeowners is that if they are currently negotiating with BoA, or if they’ve entered into the trial phase of a modification, the new servicer isn’t obligated to honor it because it wasn’t a party to the negotiation and no agreement has been struck. Many homeowners can end up in foreclosure simply because their bank sold their mortgages to servicers. Homeowners do not have any say or control over the sale of their mortgages.

You can read more here, but if you have a mortgage with Bank of America, or any other megabank, your might not be able to achieve the short-sale, modification, or deed-in-lieu agreement that you intended to. If something like this happens, it’s imperative to discuss your situation with an experienced Las Vegas bankruptcy lawyer to explore your options.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.