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Nevada, Arizona sue BofA for mortgage fraud

LOS ANGELES, December 17, 2010 (AFP) – The U.S. states of Arizona and Nevada filed lawsuits against Bank of America on Friday accusing it of defrauding cash-strapped homeowners amid the global economic downturn.

The legal action was triggered after hundreds of complaints and a year-long investigation centered on the bank’s loan modification and foreclosure practices, said Arizona’s attorney general Terry Goddard.

“Bank of America has been the slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis,” he said, announcing the lawsuit filed in the Maricopa County Superior Court.

“It has shown callous disregard for the devastating effects its servicing practices have had on individual borrowers and on the economy as a whole,” he added.

Specifically he accused Bank of America, as the biggest U.S. residential mortgage loan servicer, of breaching state consumer fraud law as well as a March 2009 agreement made between Arizona and BoA-owned lender, Countrywide.

In the agreement, called a “consent judgment,” Countrywide agreed to develop and implement a loan modification program for some of its former borrowers in the southwestern US state.

The Arizona lawsuit alleges that “Bank of America has repeatedly violated the judgment’s provisions related to loan modifications,” and seeks to order it to pay compensation, fines, lawyers’ fees and investigation costs.

“I am filing this lawsuit today because, after years of delay and broken promises, Arizonans should not have to wait any longer to seek redress,” said Goddard.

Nevada attorney general Catherine Cortez Masto also announced legal action against Bank of America “for engaging in deceptive trade practices against Nevada homeowners.”

“Consumers turn to their banking or lending institutions for answers when faced with a life changing decision such as saving their home,” said Masto.

“Bank of America’s callous disregard for providing timely, correct information to people in their time of need is truly egregious.”

A Bank of America spokesman lamented the lawsuits, which he said could complicate efforts to reach an agreement with a number of U.S. states including Arizona and Nevada.

“We are disappointed that the suits were filed at this time, however, because we and other major servicers are currently engaged…to address foreclosure related issues more comprehensively.

“That is the approach that will best broaden programs for homeowners who need assistance. Bank of America has been a cooperative partner with the attorneys general, and has worked with state leaders to evolve programs and resources to broaden assistance to distressed customers,” he added.

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