Bank of America versus the government
According to the Housing and Urban Development (HUD), America’s largest lender, Bank of America “significantly hindered” a federal review of its foreclosures on loans insured by FHA. This isn’t the first time Bank of America has come under fire, as they have become the subject of various lawsuits from consumers for illegal foreclosures (lawsuits they are losing with more frequency).
In a sworn statement from HUD, assistant regional inspector general William Nixon said, “Our review was significantly hindered by Bank of America’s reluctance to allow us to interview employees or provide data and information in a timely manner.”
The HUD filing was submitted as an exhibit in a lawsuit between the State of Arizona and Bank of America. Arizona is accusing Bank of America of misleading homeowners seeking loan modifications and interviewing former bank employees as one of their strategies in the mortgage probe to uncover wrongdoings. The overall report by HUD has not yet been made public, however, which could change the analysis on Bank of America’s wrongdoings or lack thereof in this mortgage probe.
HUD’s claims that Bank of America stonewalled their investigation, while the bank says HUD is misleading the public citing an example wherein HUD told the public that the bank did not produce documents that were demanded on a Friday but delivered on a Monday.
Bank of America claims they have provided over 55,000 documents to HUD for their investigation while HUD claims the documents are insufficient (thus meaningless).
We’ve covered in depth over recent years the wrongful foreclosures of homeowners due to the robosigning debacle wherein foreclosures proceeded without a human manually reviewing the documents, now resulting in lawsuits against the largest banks for the illegal foreclosures.
Bank of America has acquired several banks that came with extensive losses, so they’ve taken a substantial short term hit.
The question that has analysts holding their breath now is who will eat the projected $6 billion losses- Bank of America, their investors or the government. If the government pays (because the loans were backed by the FHA), the taxpayer is who ultimately pays. Given our country’s recent track record, there is a good chance the tax payers will foot the bill. Time will tell.