Mike Shedlock

Last week the state of Nevada amended its previous complaints against Bank of America.

The Amended Complaint accuses Countrywide Financial of a "pattern of pattern and practice of deceptive conduct ... misconduct cut across virtually every aspect of Defendants' operations - from originating to servicing and, all too often to foreclosing on the loans and homes of Nevada consumers".

Please consider Nevada Wallops Bank of America With Sweeping Suit

The state of Nevada dramatically expanded its lawsuit against Bank of America today, turning the narrow case it filed late last year into a broadside that targets virtually all aspects of the bank’s mortgage operations. Bank of America has previously denied wrongdoing.

The sweeping new suitcould have repercussions far beyond Nevada’s borders. It further jeopardizes a possible nationwide settlement with the five largest U.S. banks over their foreclosure practices, especially given concerns voiced by other attorneys general, New York’s foremost among them.

Nevada’s attorney general charges that Bank of America and the now-defunct mortgage giant Countrywide acquired by the bank in 2008, deceived borrowers and investors at almost every stage of the process.

According to the suit, borrowers were duped into unaffordable loans and then victimized again through a misleading mortgage modification program that homeowners tried to use to avoid foreclosure. Finally, the suit alleges, the bank filed fraudulent documents to move forward with the foreclosures.

“Taken together and separately, [Bank of America's] deceptive practices have resulted in an explosion of delinquencies and unauthorized and unnecessary foreclosures in the state of Nevada,” the suit alleges.

The state’s suit had previously been confined to the modification issue. At that time, Bank of America also said homeowners would be best served not through litigation but through reaching a multistate settlement that would “broaden programs for homeowners who need assistance.”

By expanding the suit, Nevada’s Catherine Cortez Masto joins New York Attorney General Eric Schneiderman in stepping up investigations of the bank. In addition to initiating a broad investigation of banks’ securitization practices, he recently filed a suit charging that Bank of America had fraudulently foreclosed on homeowners.

Last week, fissures in the coalition became public when Iowa Attorney General Tom Miller, who leads the 50-state coalition, removed New York’s Schneiderman from the group’s executive committee because, he said, Schneiderman had “actively worked to undermine” its efforts by opposing any quick settlement. As part of any settlement (reportedly in the range of $20 billion to $25 billion), the banks have been seeking a wide-ranging release from future legal claims, not just those related to foreclosure practices. Schneiderman has publicly rejected that idea and pushed ahead with his investigation.

Masto’s suit signals that Nevada may also reject any settlement in the near future on the foreclosure issues. Two other attorneys general, notably those from Massachusetts andDelaware, have also voiced concerns recently about any broad waiver of claims.
Bank of America Broke 2008 Mortgage Settlement Agreement

The New York Times covered this on August 30, in Nevada Says Bank Broke Mortgage Settlement
The attorney general of Nevada is accusing Bank of America of repeatedly violating a broad loan modification agreement it struck with state officials in October 2008 and is seeking to rip up the deal so that the state can proceed with a suit against the bank over allegations of deceptive lending, marketing and loan servicing practices.

In a complaint filed Tuesday in United States District Court in Reno, Catherine Cortez Masto, the Nevada attorney general, asked a judge for permission to end Nevada’s participation in the settlement agreement. This would allow her to sue the bank over what the complaint says were dubious practices uncovered by her office in an investigation that began in 2009.

In her filing, Ms. Masto contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending and failed to meet the settlement’s 60-day requirement on granting new loan terms, instead allowing months and in some cases more than a year to go by with no resolution, the filing says.

The complaint says such practices violated an
agreement Bank of America reached in the fall of 2008 with several states and later, in 2009, with Nevada, to settle lawsuits that accused its Countrywide unit of predatory lending. As the credit crisis grew, the settlement was heralded as a victory by state offices eager to help keep troubled borrowers in their homes and reduce their costs. Bank of America set aside $8.4 billion in the deal and agreed to help 400,000 troubled borrowers with loan modifications and other financial relief, such as lowering interest rates on mortgages.
This Nevada lawsuit is in addition to the FHFA $196 Billion lawsuit against 17 banks accused of "misleading Fannie Mae and Freddie Mac about the soundness of the mortgages underlying the securities".

For details of the FHFA lawsuit, please see Is it Acceptable to Present a $196 Billion Sac-O'-Sheet to Sophisticated Investors as Diamonds-in-the-Rough?

Bank of America insists it does not need to raise capital but it raised $5 billion from Warren Buffett on very onerous terms and it has been busy shedding billions of assets.

Yves Smith at Naked Capitalism reported Bank of America Death Watch: Unloading “Non-Core” Assets Aggressively

Indeed, actions speak louder than words.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
TOWNHALL FINANCE DAILY

Get the best of Townhall Finance Daily delivered straight to your inbox

Follow Townhall Finance!