U.S. Justice Department, SEC Charge Bank of America with Defrauding Investors in $850 Million Mortgage-Backed Securities

The U.S. Department of Justice has announced that it is filing a civil lawsuit against Bank of America for fraud and misrepresentation.  The suit alleges that Bank of America lied to investors about the riskiness of mortgage loans that were pooled into certain residential mortgage-backed securities.  The lawsuit filed in U.S. District Court in Charlotte alleges that Bank of America defrauded investors, including federally insured financial institutions, who purchased more than $850 million in residential mortgage-backed securities from Bank of America Mortgage Securities 2008-A (BOAMS 2008-A) securitization.

“Bank of America’s reckless and fraudulent origination and securitization practices in the lead-up to the financial crisis caused significant losses to investors,” U.S. Attorney Anne Tompkins said. “Now, Bank of America will have to face the consequences of its actions. We have made a commitment to the American people to hold financial institutions accountable for practices that violated the law and wreaked havoc on the financial system, and my office takes that commitment very seriously. Our investigation into Bank of America’s mortgage and securitization practices continues.”

The DOJ’s suit accompanied an announcement from the SEC that it also filed charges against Bank of America for defrauding investors.  The SEC alleges that Bank of America failed to tell investors that more than 70 percent of the mortgages backing the same mortgage-backed securities offering – the BOAMS 2008-A – originated through the bank’s “wholesale” channel of mortgage brokers unaffiliated with Bank of America entities.  Bank of America knew that such wholesale channel loans – described by Bank of America’s then-CEO as “toxic waste” – presented vastly greater risks of severe delinquencies, early defaults, underwriting defects, and prepayment.  These risks all directly impact the returns to investors, however Bank of America only selectively disclosed the percentage of wholesale channel loans to a limited group of institutional investors.  Bank of America never disclosed this material information to all investors and never filed it publicly as required under the federal securities laws.

I applaud both the Department of Justice and SEC for continuing to demand accountability from those who helped caused the financial crisis.  The economy is rebounding and the mortgage market is improving, so it would have been easy to “let bygones be bygones.”  However, Bank of America is being called to answer for its actions.  Banks got away with a lot, and this won’t right all wrongs, but it’s at least another small portion of justice.

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  1. #1 by Chris L on August 11, 2013 - 9:30 am

    Me and my grandparents are looking to sue Bank of America, with a group of people who have been harassed and treated wrongfully. Malicious practice and unprofessional work. Feel free to contact me for further information, please & thank you.

    bigdog359six (3596) @ yahoo.com

  2. #2 by cindy on September 7, 2013 - 7:19 pm

    Don’t applaud the SEC and DOJ too loud – they are letting Wells Fargo get away with doing the same thing. I think that its all a scam so that Wells Fargo can take over BOA (without liabilities, of course). We fought for 5 years on a predatory refinance – we got nowhere, and Wells Fargo did everything from file robo-signed, backdated affidavits to filing absolutely false affidavits, the judge ignored all of our certified mail receipts and our affidavits and even our closing papers.
    No matter what, Wells Fargo gets away with it all. We were never offered a hamp or hafa plan, and we have sent numerous letters, in writing by certified mail, asking that we be allowed to sell the property for fair value, and we have offered deed-in-lieu.
    Now, Wells Fargo has filed a new false affidavit in the case – swearing that they offered us loss mitigation packages under hamp and hafa and stating that “borrower did not respond”. LIARS. We NEVER received any such package – and the two times we received 1-page letters indicating that there was a “borrower package enclosed”, there was no such borrower package enclosed and we wrote back, certified mail, telling them to send us the package and again offering deed-in-lieu. WELLS FARGO DOES NOT RESPOND TO LETTERS, INQUIRIES, NOR QUALIFIED WRITTEN REQUESTS – and they have gotten away with it for over 5 years.
    The false “borrower did not respond” affidavit was sworn to by a Ms. Wheatherby, supposedly a President of loan documentation – so she must have knowledge of a Mr. John Morgan, a Ms. Kathy Cake (both also of Wells Fargo’s Office of President), and numerous other Wells Fargo employees who have sent letters of acknowledgement of our letters and responses – but no matter….foreclosure is the goal, even after Wells Fargo sold the loan for more than the face amount of note. The note continues to be bought and sold, and no amount of our written requests for identity of loan owner was responded to by Wells Fargo.
    Our family broken, our dreams destroyed, and our future uncertain, because we took on the frauds committed against us. They can all rot in hell, Fannie, DOJ, SEC, MERS, Banks, all sleeping together, working on thier government-land-grab plan to convert us all into perpetual renters. The real estate industry and banking industry work side by side to make it happen, i’m sure. After all, the houses will be rebuit and will be remortgaged – endless supply of us suckers who work hard and put everything into a home believing we can pay it off one day and live peacefully. Try to pay off your mortgage – lol you might be surprised at what “mistakes” start appearing in your escrow….

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