This class action brings suit against Bank of America, NA (BOA) and Integon National Insurance Company alleging they conspire “to maximize fees assessed on borrowers’ accounts when they are behind on their payments.” BOA, the complaint alleges, requires things like repeated and unnecessary property inspections and force-placed flood insurance. These are added to the amount the homeowner must pay off to avoid foreclosure.
The complaint alleges that “BOA uses an automated default servicing platform to illegally, unfairly, and fraudulently charge defaulted or at-risk-of-default borrowers for multiple and repetitive ‘property inspections’ that are not required by lenders, not permitted by lender guidelines, and in many cases not allowed under state and federal regulations and guidelines.”
BOA also charges homeowners for “unnecessary expenses and/or unprovided services,” the complaint alleges, “which are in some cases outright fraudulent and in all cases excessive, deceptive, and otherwise unfair.” It claims that Integon has an exclusive contract with BOA to help it force-place “insurance at unconscionably high rates, well above market rates…”
The complaint alleges that BOA’s acts are “misleading, deceptive, and unfair” and that they violate laws such as the Truth in Lending Act (TILA) and California’s Rosenthal Fair Debt Collection Practices Act (CFDCPA) and other state laws.
BOA may play two roles in mortgages: lender and loan servicer. If the mortgage is sold off, either to Fannie Mae/Freddie Mac or for part of a mortgage-backed security, the lender’s rights are sold; BOA becomes only the servicer. The complaint contends that BOA then “has an economic incentive to push borrowers into default[.]”
In a default, the lender suffers the loss of the principal, but if the loan has been securitized, the investors suffer that loss; BOA does not. The complaint claims, “Fannie Mae/Freddie Mac and [the Department of Housing and Urban Development (HUD)] as insurers of a loan do reimburse BOA for all the property inspections and any other default[-]related services, including … fees for advances from a loan’s escrow account, such as property taxes and insurance payments.”
In the case of a default, a servicer may receive additional income from late fees, inspection fees, attorney fees, foreclosure fees, and so on. It may also receive fees if it helps with refinancing. Therefore, a default may be more profitable for a servicer than normal servicing.
Two classes have been proposed for this action, with a California subclass for each.
- The National Property Inspection Fee Class is all persons in the US or its territories who were charged one or more property inspection fees through BOA’s automated loan servicing platform, even though they were living in the property and BOA was aware of this, or who were otherwise charged an inspection fee in violation of servicing guidelines.
- The National Force-Placed Insurance Class is all persons in the US or its territories who have or had a mortgage with BOA within the statute of limitations who were charged for a force-placed insurance policy obtained through BOA or its related companies.
Topic: Loans
Most Recent Case Event
Bank of America Excessive Fees on Defaults Complaint
October 29, 2021
This class action brings suit against Bank of America, NA (BOA) and Integon National Insurance Company alleging they conspire “to maximize fees assessed on borrowers’ accounts when they are behind on their payments.” BOA, the complaint alleges, requires things like repeated and unnecessary property inspections and force-placed flood insurance. These are added to the amount the homeowner must pay off to avoid foreclosure.
Bank of America Excessive Fees on Defaults ComplaintCase Event History
Bank of America Excessive Fees on Defaults Complaint
October 29, 2021
This class action brings suit against Bank of America, NA (BOA) and Integon National Insurance Company alleging they conspire “to maximize fees assessed on borrowers’ accounts when they are behind on their payments.” BOA, the complaint alleges, requires things like repeated and unnecessary property inspections and force-placed flood insurance. These are added to the amount the homeowner must pay off to avoid foreclosure.
Bank of America Excessive Fees on Defaults Complaint