Bank of America files suit against itself 11 times in March
On behalf of Ellett Law Offices , P.C. posted in 1. Personal Bankruptcy on Wednesday, April 11, 2012
“This just strikes me as classic robo foreclosure,” said a foreclosure analyst in response to Bank of America’s befuddling more to sue itself. One time would be bizarre enough, but it turns out the financial institution has filed a “self-suit” 11 times since March. Why would Bank of America do such a thing?
First, the insinuation of the lawsuit having “robosigning” tie-ins is not a stretch. As the analyst points out, Bank of America’s lawyers may have filed hundreds of foreclosure suits like this in one day and, in a mass-producing effort, simply wrote the name of whatever bank popped up on their computer when they searched for homes that could be foreclosed. But Bank of America says they filed these suits because they have a hand in multiple liens on the same property.
Often times when a borrower takes out a home equity loan, the investor will bring in a financial institution — such as Bank of America — to handle the primary loan, or first lien. The institution will communicate with the borrower, deal with the loan payments and ultimately handle the foreclosure process.
It is not uncommon — especially given the popped housing bubble of 2008 — for these mortgaged homes to have a second lien, which can be controlled by banks as well. They are more risky loans that carry high interest rates because they act as a security blanket for the first lien. Any losses are to be absorbed by the second lien before the first lien is affected.
In these lawsuits, Bank of America was servicing the first lien while also controlling the second lien. So when Bank of America (acting on behalf of the investors in the first lien) attempted to foreclose a home where they are holding the second lien, they had to name themselves as a defendant.
Source: Huffington Post, “Bank of America Sues Itself In Unusual Foreclosure Case,” Zach Carter, April 10, 2012
Tags: Bank of America, foreclosure, liens, mortgage, robosigning