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HUD Inspector Says Bank Hindered Foreclosure Investigation - Arizona v. Countrywide

June 17, 2011

As Corona foreclosure defense lawyers, we've believed for a long time that lenders aren't interested in having their loan modification practices exposed to the light of day. So we were not surprised to read that a federal inspector is accusing Bank of America of intentionally obfuscating inspections by the federal government. As the Huffington Post reported June 13, a fraud examiner for the federal Department of Housing and Urban Development told an Arizona federal court that BofA withheld information and inteviewees and slowed down the process. The inspector, William W. Nixon, eventually asked the Justice Department to compel the bank to help. He filed a declaration with this information June 8, as part of the state of Arizona's lawsuit accusing Countrywide Financial, now a unit of BofA, of violating state consumer protection laws.

Nixon was actually working for HUD at the time, to ensure that BofA was following foreclosure rules when it foreclosed on FHA-insured loans. In his statement to the court in State of Arizona v. Countrywide Financial Corp., he wrote that his work was "significantly hindered" by BofA's reluctance to provide data in a timely manner, allow employees to be interviewed and provide someone who could explain and clarify information. Attorneys for the bank refused to allow employees to answer basic questions, he said. Attorneys also reviewed all information requests his team made and slowed down the process by sending all requests through one person, even requests for information that should have been readily available. Information provided in response to subpoenas was incomplete, and when Nixon's staff requested a walkthrough of document execution, BofA argued that they didn't need one "and instead showed my staff a set of filing cabinets."

Our Los Angeles County foreclosure defense attorneys hope federal regulators are paying attention to this filing. It's a supporting document in a lawsuit that doesn't directly involve the federal government, but the information Nixon provided paints a picture of a major lender (in fact, the largest U.S. bank by assets) that appears unwilling to meet basic legal requirements or keep its promises. It's not clear whether Nixon's staff went in to this inspection believing that BofA had something to hide, but either way, the bank's behavior implies pretty strongly that it did. This ought to be unacceptable to anyone who believes that openness is an important part of democracy. If repeated in Arizona's lawsuit, the bank's behavior could also lead to sanctions.

Howard Law PC represents borrowers who are tired of dealing with excuses and unfair tricks from their loan servicers. Many of our clients come to us after months, sometimes over a year, of trying to get a clear answer on a loan modification but instead getting delays, mistakes, red tape and excuses. Our Santa Ana foreclosure defense lawyers have come to believe that lenders don't really want to grant loan modifications; they want to maximize their income by drawing out the process long enough to collect fees and eventually send the borrower into foreclosure. Nonetheless, borrowers have legal rights, and some of the things lenders do to hasten foreclosure is illegal under predatory lending laws or a violation of HAMP rules. To hold your lender accountable, call us today at 1-800-872-5925 or send us a message through our website to set up a free, confidential evaluation of your case.

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