Bank of America’s deceptive foreclosure practices brought to surface

Category: Residental, Travis County No Comment December 2, 2011

The same day Massachusetts Attorney General filed a lawsuit against the nation’s biggest bank over deceptive foreclosure practices, an Austin woman sued Bank of America over fraudulent foreclosure practices.

Maria Gonzales filed a lawsuit in state District Court in Travis County alleging Bank of America fraudulently sough to foreclose on her home, the Statesman has learned. According to informations obtained by the newspaper, the bank wrongly invalidated a loan modification agreement, because it wasn’t signed by her husband, although he died four years ago, way before the agreement was made.

How this could happen? Here is the story. The Gonzales couple bought a Southeast Austin home five years ago with the help of an adjustable rate mortgage serviced by Countrywide Financial Corp. One year later, Albert Gonzales died of a heart attack.

If you recall, the financial crisis came and Bank of America took over Countrywide, becoming the servicer of the Gonzales’ loan.

The financial crisis hit many households in the area, and Gonzales’ was one of them, so she fell behind on her payments last year. Knowing her options, she sought a loan modification from her servicer, Bank of America, which was approved January 2011.

While it looks like a successful case of a loan modification, here is where things are becoming interesting, and Bank of America’s fraudulent foreclosure proceedings get into spotlight.

Maria Gonzales was making her payment according to the agreed terms, until she received a notification in June, coming from Bank of America, that the modification agreement was canceled, because it had not been signed by her husband, who was a co-borrower of the original loan. And this happened three years after Albert Gonzales died of a heart attack. And more interesting, the cancellation came after Maria Gonzales sent a copy of her husband’s death certificate.

But this wasn’t enough for Bank of America, so it proceeded further with foreclosure, and notified Maria Gonzales that it intends to sell her home at a foreclosure auction.

This was the moment when Maria Gonzales filed the lawsuit against Bank of America’s mortgage servicing arm, accusing it of breach of contract, negligent misrepresentation and violation of the Texas Debt Collection Act, and requested the court to prevent Bank of America from listing her home for foreclosure, and in addition she seeks unspecified damages.

According to Statesman informations Visiting District Court Judge Gus Strauss yesterday granted the injunction preventing BofA from listing Gonzales’ home for foreclosure for the next 2 weeks. Another hearing in the case was set to Dec. 15.

Maria Gonzales’ foreclosure defense attorney Robert Doggett of Texas RioGrande Legal Aid said that the incident is not an isolated one and “We know this is a systemic problem that Bank of America has and that other mortgage servicers have. The relief we’re asking for in this case is not as broad as what the Massachusetts attorney general is asking for. We’d hope the Texas attorney general would spend as much time on this sort of thing as the attorney general of Massachusetts has.”