It’s been six years since the housing crisis and subsequent Great Recession reared their ugly heads, ultimately revealing extensive banking and mortgage servicing abuses that led us down that path in the first place.
In that time, one of the primary targets of civil and criminal actions by the U.S. Justice Department and state attorneys general has been Bank of America, both for its own misdeeds and for those of subsidiaries Countrywide Financial Corp. and Merrill Lynch & Co., which were snapped up by the financial giant in 2008.
In September, the bank tendered a $7.65 million fine to the Securities and Exchange Commission for overstating its regulatory capital by more than $4 billion after acquiring Merrill Lynch – a problem it attributed to “a simple accounting error.” That was after a $16.65 billion settlement it reached with the U.S. government for allegations of selling flawed mortgage securities prior to the 2008 bubble burst. Of that, roughly $9.65 billion will have to be paid in cash to the Justice Department and six state government agencies, while the remaining $7 billion will be distributed in the form of consumer aid, such as modifying loans on underwater mortgages and tearing down derelict properties.
Our Miami foreclosure defense attorneys understand that all told since the start of the crisis, the bank has been found legally liable for a cumulative $91.2 billion in monetary and non-monetary settlement agreements.
While some pro-business publications have criticized the heavy fines, settlements and judgements against the North Carolina-based firm, consider that these agreements stemmed from violations of the law that trampled on consumer rights. People lost their homes and their financial security and entire communities were upended. Many are still reeling.
Yet no BofA executive has been to jail for these violations, as the firm has the kind of deep pockets that ward off that kind of consequence – something virtually no other entity is able to do.
The $16.5 billion agreement came after the U.S. Justice Department was preparing to take the bank to court for knowingly providing credit to borrowers who could not afford loans and then turning around and selling those bundled mortgages to unwitting investors. When the borrowers defaulted (as of course they were bound to do), people lost their homes and investors were left stuck with the bill.
Although many of the deals in question were from Countrywide and Merrill Lynch, the DOJ found BofA had plenty of its own issues with regard to lax underwriting standards. That included outright fraud in the form of changing applicants’ financial information in order to ensure the loan would be approved. In one instance investigators uncovered, a BofA underwriter made 40 attempts to get an “accept” rating on a loan to be accepted according to a listed statement of facts.
Internal documents indicate top-level executives and CEOs were well-aware of these issues and even warned certain other executives. Of course, the American public and investors were left in the dark.
This all counters the notion that borrowers were somehow complicit in all this. Most of the time, they didn’t know these actions were happening on the back end. They assumed that if the bank approved them, they should have faith the loan was affordable.
What’s more, these settlement agreements have done little to repair the actual damage to families and communities, especially as regulators have questioned the firm’s compliance with the settlement terms (i.e., timely mortgage loan modifications, etc.).
Bank of America isn’t the only guilty party of course, but it’s one of the biggest.
At least one action is still pending, where mortgage bond insurer Ambac Financial Group is suing the bank for $2.5 billion. Plaintiff contends subsidiary Countrywide sold the firm billions of dollars in toxic mortgage-backed securities in the lead-up to the financial crisis.
If you’re battling foreclosure in Miami or the surrounding areas contact Bruce Jacobs & Associates for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.
The Complete List: Bank of America’s Legal Fines and Settlements Since 2008, Oct. 1, 2014, By John Maxfield, The Motley Fool
More Blog Entries:
“Too Big to Jail”: Wall Street Accountability Promises Fall Flat, Oct. 25, 2014, Miami Foreclosure Defense Lawyer Blog