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O Scott Reckard

O 6rom: p

O ’ecember 18, 2010 11:00PM

UN’ R 6
R : Bank of America has been accused of misleading borrowers into expecting loan
modifications that never eventuated. 
 AP

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The desert states, among the hardest hit by foreclosures, are also part of a 50-state coalition that is
negotiating with major banks over a host of foreclosure-related complaints.

While that joint effort began only recently under the leadership of
owa Attorney General Tom Miller,
Nevada and Arizona officials said on 6riday that they had been investigating a flood of loan modification
complaints concerning Bank of America for a year and a half.

Bank of America, which provides customer service on more loans than any other lender, "has been the
slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis," Arizona
Attorney General Terry Goddard said. "
t has shown callous disregard for the devastating effects its
servicing practices have had on individual borrowers and on the economy as a whole."
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n addition to fraud allegations, Goddard's lawsuit accuses the bank of failing to implement anti-
foreclosure measures that were part of a March 2009 settlement of a multi-state predatory lending case
against Countrywide 6inancial Corp unit, which Bank of America acquired in 2008.

Officials in Arizona, as in California and other states, had accused Calabasas, California-based
Countrywide of defrauding consumers by deceptive marketing of sub-prime and pay-option loans.

Bank of America said the lawsuits, filed in state courts, were regrettable.
t recently announced its own
initiatives to improve servicing of troubled loans, including assigning 2,500 loan-origination employees
to help with modification efforts. The bank said problems in Nevada and Arizona would be best
addressed through those efforts and through the negotiations with the Miller-led coalition of 50 states.

Loan modifications that lower payments are supposed to keep borrowers in their homes, cost banks and
loan investors less than foreclosures would and reduce the number of vacant properties in
neighborhoods.

With the foreclosure crisis in its third year, troubled borrowers increasingly have accused banks of acting
in bad faith by promising permanent modifications that are never delivered.

n an interview, Goddard said many distressed Countrywide borrowers in Arizona had been left in limbo
as Bank of America failed to make timely decisions on their status, leaving them financially worse off
when permanent modifications are denied after many months.

Goddard said Bank of America failed to provide justifications for denials of modifications, misled
borrowers into thinking they had to miss payments to obtain modifications and initiated foreclosure
proceedings while trial loan modifications were in place - all in violation of its settlement with the state
last year.

The latest suit, filed in Maricopa County Superior Court, seeks up to US$25,000 for each violation of the
consent judgment and up to $10,000 for each violation of the Arizona Consumer 6raud Act.

The suit filed on 6riday by Nevada Attorney General Catherine Cortez Masto seeks damages on behalf of
borrowers that it said were forced to wait six months or a year for loan modification decisions that
should have been made in one to three months.

t quoted Bank of America employees accusing the bank of understaffing the loan modification effort
and using undertrained workers, creating a "chaotic" process for borrowers.