On Thursday, Bank of America Corporation’s (BAC - Free Report) foreclosure division – ReconTrust Co. – settled charges made by Washington State Attorney General, Rob McKenna. The charges were filed on the grounds that ReconTrust failed to comply with the state laws of Washington.
McKenna claimed that this division was futile in the role of an unbiased third-party, acting on the interests of both lender and borrower. Moreover, it did not have an office in the state of Washington.
In addition, it failed to identify the actual loan owners and provided conflicting information to the borrowers regarding the methods to stop foreclosures. To resume its discontinued business in the state, the company will have to fulfill the conditions laid down to safeguard the interests of the homeowners.
Texas-based ReconTrust is a foreclosure trustee services provider in California, Texas, Arizona, Nevada, Virginia and seven other states.
Earlier this year, five large U.S. banks – JPMorgan Chase & Co. (JPM - Free Report) , Bank of America Corporation (BAC - Free Report) , Citigroup Inc. (C - Free Report) , Ally Financial Inc. and Wells Fargo & Company (WFC - Free Report) – accused of faulty foreclosure practices, agreed to a $25 billion settlement deal. Under this settlement, Bank of America had the largest financial commitment of $11.8 billion. Out of this amount, ReconTrust has already paid a sum of $1.1 million.
Even though it will take awhile to fully overcome the foreclosure mess, this settlement is a step forward. We believe that various corrective measures would surely prevent yet another foreclosure crisis, if these are implemented correctly.
Bank of America currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term Neutral recommendation on the stock