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BofA (BAC) to Face RICO Claims on HAMP Modifications
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It seems that Bank of America Corporation’s (BAC - Free Report) tryst with litigation matters is never ending. Earlier in the week, the U.S. Circuit Court of Appeals for the Tenth Circuit reversed the decision of a district court and revived the case which alleged BofA and Urban Settlement Services (a settlement company) of violating Racketeer Influenced and Corrupt Organizations Act (RICO).
While giving its decision on the case, the Tenth Circuit stated “Because the plaintiffs sufficiently allege the existence of a RICO association-in-fact enterprise distinct from BOA, Urban [Lending Solution]’s participation in the conduct of that enterprise, and that both defendants engaged in a pattern of racketeering activity, we reverse the district court’s dismissal of the plaintiffs’ RICO claim and remand for further proceedings.”
Therefore, this ruling reinstates the class action claims (filed in Jul 2013) by plaintiffs including Richard George and other borrowers that BofA and Urban faked compliance under the Home Affordable Modification program (HAMP), while impeding and delaying their HAMP loan modification applications. The HAMP was mandated by the Congress when BofA was paid $45 billion in bailout funds during the 2008 financial crisis.
Allegations
The plaintiffs had alleged that BofA and Urban systematically failed to provide timely loan modifications to the distressed borrowers in a deliberate and coordinated plan. Further, they accused the company of purposely scattering the documents sent by the borrowers to various computer databases, thereby giving the impression that required paperwork is incomplete “to convert their trial plans into permanent modifications.”
However, in Sep 2014, a district court dismissed the claims. In its ruling, a three-judge bench stated that the plaintiffs failed to properly plead that BofA was “distinct from the alleged racketeering enterprise.”
What’s Next?
In an e-mail statement to Bloomberg BNA, BofA spokesman Rick Simon said, “In fact, Bank of America has been an industry leader in HAMP and other beneficial mortgage modifications. We are reviewing the Circuit court’s decision and considering our options.”
The revival of the lawsuit is a setback for BofA. The company has been facing several cases and is trying to get past these matters.
Currently, BofA carries a Zacks Rank #3 (Hold). Some better-ranked finance stocks include Hancock Holding Company , State Bank Financial Corporation and Comerica Incorporated (CMA - Free Report) . All these sport a Zacks Rank #1 (Strong Buy).
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BofA (BAC) to Face RICO Claims on HAMP Modifications
It seems that Bank of America Corporation’s (BAC - Free Report) tryst with litigation matters is never ending. Earlier in the week, the U.S. Circuit Court of Appeals for the Tenth Circuit reversed the decision of a district court and revived the case which alleged BofA and Urban Settlement Services (a settlement company) of violating Racketeer Influenced and Corrupt Organizations Act (RICO).
While giving its decision on the case, the Tenth Circuit stated “Because the plaintiffs sufficiently allege the existence of a RICO association-in-fact enterprise distinct from BOA, Urban [Lending Solution]’s participation in the conduct of that enterprise, and that both defendants engaged in a pattern of racketeering activity, we reverse the district court’s dismissal of the plaintiffs’ RICO claim and remand for further proceedings.”
Therefore, this ruling reinstates the class action claims (filed in Jul 2013) by plaintiffs including Richard George and other borrowers that BofA and Urban faked compliance under the Home Affordable Modification program (HAMP), while impeding and delaying their HAMP loan modification applications. The HAMP was mandated by the Congress when BofA was paid $45 billion in bailout funds during the 2008 financial crisis.
Allegations
The plaintiffs had alleged that BofA and Urban systematically failed to provide timely loan modifications to the distressed borrowers in a deliberate and coordinated plan. Further, they accused the company of purposely scattering the documents sent by the borrowers to various computer databases, thereby giving the impression that required paperwork is incomplete “to convert their trial plans into permanent modifications.”
However, in Sep 2014, a district court dismissed the claims. In its ruling, a three-judge bench stated that the plaintiffs failed to properly plead that BofA was “distinct from the alleged racketeering enterprise.”
What’s Next?
In an e-mail statement to Bloomberg BNA, BofA spokesman Rick Simon said, “In fact, Bank of America has been an industry leader in HAMP and other beneficial mortgage modifications. We are reviewing the Circuit court’s decision and considering our options.”
The revival of the lawsuit is a setback for BofA. The company has been facing several cases and is trying to get past these matters.
Currently, BofA carries a Zacks Rank #3 (Hold). Some better-ranked finance stocks include Hancock Holding Company , State Bank Financial Corporation and Comerica Incorporated (CMA - Free Report) . All these sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>