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BofA Fined for Ignoring Judge, Refusing Loan Modification Order

Bank of America has been fined $220,000 for defiantly going against a court-ordered mortgage loan modification for a Florida couple who were trying to save their home.

Our Miami foreclosure lawyers understand that the bank essentially refused to honor the agreement. The bank couldn’t be bothered to send representatives to federal court over the course of several hearings in the case. Yet, its collections department continued to collect mortgage payments from the homeowners.

Then on March 5, the judge gave the bank one month to pay a fine – which is $223,000. As that amount also happens to be the full amount of the couple’s mortgage debt, the bank could choose to either pay the fine or simply forgive the couple’s debt. The decision is still subject to appeal from the bank.

Either way, such a penalty is mere pittance for a financial giant like Bank of America, even though it is believed to be one of the biggest-ever sanction of its kind. We truly hope this couple benefits from the bank’s egregious oversight (or blatant disregard of the law, however you choose to see it). What we do know is that given the size of Bank of America, it’s unlikely this case will have much impact in terms of how the bank conducts business.

When even the U.S. attorney general admits a company is basically too large to prosecute, the bank likely never gives cases like this more than a second thought. That’s why you have to ensure that your foreclosure attorney is ready to fight aggressively to make sure your rights are not overlooked or outright trampled.

In this case, the Orlando-area couple filed for personal Chapter 13 bankruptcy back in 2010, aiming to restructure their debts while fighting to keep their 2,000 square-foot home.

In early 2011, the couple were approved for a mortgage loan modification that would have allowed them to chop $550 off their monthly mortgage payments. The bankruptcy court rubber stamped that deal a few months later, and it further adopted the couple’s entire debt repayment plan soon thereafter.

This really should have been the end of the story. But less than a month after getting the bankruptcy court’s final order, the couple got a letter from the bank informing them that their loan modification had in fact been denied. Then, the bank continued to bill them the higher amount through 2012. This was in direct violation of the court-ordered agreement that had been reached.

The case dragged on as the couple had to take the bank back to court. But lawyers for the bank missed numerous hearings and failed to file appropriate motions. This is not the first time Bank of America has done this, and Bank of America isn’t even the only bank to engage in this sort of behavior.

Just the fact that the court imposed a sanction of this size indicates a clear frustration with a pattern of behavior. While judges may give banks a broad amount of latitude in these cases (far more than we feel they rightly deserve), they certainly don’t appreciate when banks take to ignoring the court and its judgments.

It’s not clear whether the bank will appeal this measure. We do know that a spokeswoman has apologized – both to the homeowners and to the court – saying such actions are not in line with how they would expect a loan modification or foreclosure to be handled. She further indicated an internal review is underway to determine what went wrong.

If the bank is actually serious about wanting to know what is the root cause of errors like this (and we have our doubts), that review might be quite extensive.

Last summer, a judge in Texas fined BofA $300,000 after the firm broke two loan modification agreements and still continued to harass the homeowner for higher payments. A few months later, a judge in Virginia fined the bank some $8,000 because it didn’t comply with the terms of a settlement in a case where a homeowner had accused it of wrongful foreclosure and fraud. Also last year, a Florida bankruptcy judge fined the bank $12,000 for hounding an 80-year-old woman whose home had already been surrendered as part of a Chapter 7 bankruptcy. After the bankruptcy case was closed, the bank called her more than 100 times demanding more payments. That was after a loan modification deal had been repeatedly rejected by the bank.

What’s especially insulting to taxpayers is that this and similar cases are unfolding throughout the country in the wake of numerous multi-billion dollar settlements intended penalize improper behavior and put these institutions in check. It seems the banks have learned virtually nothing, and are still taking the stance that they remain above the law, untouchable.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

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