Bank of America fined for Orange County mortgage abuse

The $9.3 billion settlement between major banks and the federal government was supposed to provide aid to homeowners in the struggling economy. The agreement was meant to protect them against the types of abusive foreclosure activities lenders were practicing with the “robo-signing” scandal and other actions. But some Florida consumers, judges, and bankruptcy lawyers claim abuse from big lenders still continues. Several homeowners who thought they had debt relief from either Chapter 7 or Chapter 13 bankruptcy have experienced uncooperative lenders and continued harassment from collection agencies.

A Florida bankruptcy lawyer says judges are starting to get fed up with some banks’ refusal to honor court rulings in foreclosures and bankruptcies. An Orlando judge hit Bank of America with a $220,000 sanction for ignoring the court-approved loan modification for an Orange County couple. After the homeowners filed for Chapter 13 in 2010, the bank at first appeared willing to lower their monthly payments to $550, but then they continued billing the couple the higher mortgage amount throughout 2011 and 2012. Bank of America also failed to appear to multiple hearings to resolve the issue.

Last year, a bankruptcy judge fined Bank of America $11,500 for harassing an elderly woman for back mortgage payments, despite having had her mortgage debt discharged through Chapter 7 bankruptcy. She says she surrendered her home after repeated attempts to get the bank to approve a loan modification went nowhere.

The financial-services lawyer for the publisher of Consumer Reports magazine says the federal settlement with major lenders hasn’t been enough, and that more needs to be done to help homeowners stop foreclosure.

Source: Orlando Sentinel, “Bank of America fined for repeated violations in Orange homeowners’ bankruptcy case,” Ric hard Burnett, Mar. 19, 2013