The Strategist

BofA fined $ 45M for predatory lending

03/29/2017 - 14:23

Bankruptcy court in American Sacramento, California, ruled to impose a $ 45 million fine on Bank of America (BofA) for illegally impounding a mortgaged house and threatening family members of the debtors.

Brian Katt
Brian Katt
As follows from decision of Judge Christopher Klein, the bank acted "unceremoniously and heartlessly", that is why the penalty is so great - "you cannot laugh at it at a board meeting and immediately forget about everything". Bulk of the funds will be paid in favor of law faculties and consumer protection organizations in the US. Family of the victims will receive $ 1.1 million to compensate for damage, emotional stress and legal costs.

In 2008, Erik and Renee Sundquist lost their construction firm due to the financial crisis and recession, and had to move into a cheaper house. For this purpose, they took on a loan of $ 590,000 in a bank that was later absorbed by BofA, according to The Wall Street Journal (WSJ). At the same time, they were promised that monthly payments would be reduced, since the initial rate (6%) was quite high for the United States. 

However, Bank of America’s management refused to change the terms for those customers who paid the loan on time. In March 2009, the Sundquist stopped making payments. They sent to the bank about 20 requests for review of the conditions and restructuring. In turn, the bank lost all applications, or recognized them as incomplete, or required a re-sending without any explanation.

In June 2010, the Sundquist filed an application for bankruptcy, which was to be a step towards restructuring the mortgage. However, BofA did not agree on that. In the US, bankruptcy petitions for individuals stop the process of withdrawal of property rights and following sale. However, the bank did not take into account these rules, and demanded eviction in three days. BofA pursued the couple, terrorized one of their children and eventually forced the family to leave the house. The woman was hospitalized with a heart attack, her husband tried to commit suicide. 

Later, management of Bank of America canceled sale of the house, but did not notify Sundquist about it. Meanwhile, an association of the district’s homeowners fined them $ 20 thousand for unsightly look of the house in which they no longer lived.

The bank’s representatives said that they are considering a number of the judge’s decisions unreasonable, and are pondering a response.

In recent years, the US courts have been issued decisions on serious violations in the process of seizure of real estate and mortgage restructuring, the WSJ notes.

Net profit of the US banking giant Bank of America Corp. (BofA) in 2016 amounted to $ 17.906 billion, which is 13% higher than the result of the same period last year. Diluted earnings per share were $ 1.50 against $ 1.31 in 2015. The bank’s revenue, net of interest expenses for the reporting period, amounted to $ 83.701 billion, which is 0.88% more than a year ago.


< >

Thursday, February 29th 2024 - 04:06 Tata to build battery plant in UK's Somerset