Investment
Big banks remain in legal trouble over home loans
Those looking for a home mortgage loan should probably look to other loan avenues, like credit unions, rather than big banks to stay out of legal fray.
Most of the major banks, including Bank of America, Wells Fargo, Citigroup, JP Morgan Chase and Co., have been involved in lawsuits from both the government and homeowners since 2010 – all related to their dealings both before and after the housing market collapsed in 2008.
A federal judge dismissed a lawsuit from the Federal Deposit Insurance Corp. (FDIC) against Deutsche Bank AG and Credit Suisse Group AG last year because the action was filed past the time limitations for lawsuits.
BOA, Chase and Citigroup settled their case with the FDIC.
Other cases filed against the major banks include a case filed in 2011 by the federal regulator for Fannie Mae and Freddie Mac against 17 of the largest banks in the country and the U.S. Department of Justice filed a case in 2012 in Manhattan Federal Court against Bank of America alleging the bank sold more than $1 billion in bad loans to Fannie Mae and Freddie Mac.
The DOJ and the U.S. Securities and Exchange Commission filed another lawsuit in Charlotte, N.C., which is headquarters to Bank of America, in 2013 regarding statements made to the bank’s investors regarding home mortgage loans.
Those suits are still floating in the wind with no definitive end reported in mainstream media outlets.
Bank of America did settle with the DOJ in a separate 2012 lawsuit where the government alleged the bank had discriminated against homeowners with a disability income.
Major banks aren’t just going to court to fight lawsuits from the government. Many homeowners have also filed lawsuits. Bankclassaction.com lists consumer complaints against banks and BOA tops the list with 1,449 complaints, followed by Countrywide with 515 complaints, Wells Fargo with 344 complaints and Chase with 339 complaints.
Three homeowners filed a case against BOA after testimony in a separate lawsuit in Massachusetts revealed that employees were told by superiors to deliberately delay home modification applications, according to consumerist.com. The intent, according to allegations submitted by homeowners, was to either force them into foreclosure or into a higher interest rate under a new loan.
There are currently at least 10 ongoing class action cases involving mortgage loans, according to bankclassaction.com. Those cases are in Florida, New York, Nevada, and California.
