Bank of America Mortgage Servicing Failures Continue to Harm Homeowners’ Credit Reports
The mortgage servicing giant, Bank of America, was recently sued for the second time by the same homeowners for false credit reporting. The federal judge presiding over the case recently denied the Bank's motion to kick the case out of court.
Bank of America is no stranger to private consumer lawsuits, Attorney General complaints, and Consumer Financial Protection Bureau enforcement actions arising from the Bank's mortgage servicing failures which can cause great harm to the folks that have the unfortunate experience of being stuck with Bank of America as their mortgage servicer.
Here, the homeowners originally sued Bank of America in 2014 because the Bank reported to the credit reporting agencies – Experian, Equifax, and TransUnion – that the homeowners were more than thirty days late with their mortgage payments during 2010 and 2011. This was wrongful because the homeowners participated in a loan modification program offered by Bank of America that included conditions that the Bank would not report payments as delinquent or late if the homeowners made the modified payments.
It is not uncommon for mortgage servicers to offer loan modifications via government programs that have conditions requiring the mortgage servicer to report the loan as current as long as the homeowner fulfills modification program requirements.
The homeowners' first lawsuit alleged the Bank violated the Fair Credit Reporting Act when it failed to conduct a reasonable investigation into the late payment credit reporting surrounding the time period in which the homeowners made the modified payments.
Federal law provides important safeguards to protect against erroneous credit reporting by banks like Bank of America PROVIDED the consumer disputes credit reporting information directly with the credit reporting agency. You must send your dispute directly to the credit reporting agencies. If you do, like the homeowners in this case, the Bank has a duty to conduct a reasonable investigation of the dispute. If the bank does not do a reasonable investigation, the bank may be liable for violating the Fair Credit Reporting Act.
Bank of America had had enough and decided it would settle the 2014 lawsuit on April 8, 2015.
Fast forward—it's now 2017 and the homeowners sue Bank of America again. For what? You guessed it. Bank of America reported the same delinquent payments in 2010 and 2011 AFTER the April 8, 2015 settlement, the homeowners allege in the most recent lawsuit. The Bank filed papers seeking to kick the homeowners' lawsuit out of court on the grounds of res judicata—claiming that the homeowners had already fully litigated and settled any claims they had regarding the Bank's credit reporting of the 2010 and 2011 late payments.
In an Order filed August 20, 2019, the court noted that Bank of America's reporting of delinquent payments in 2010 and 2011 was the subject of the homeowners' previous lawsuit; however, the claims in the 2017 lawsuit –reporting delinquent payments in 2010 and 2011—did not arise until the first lawsuit was settled and dismissed. The Bank reported the late payments for 2010 and 2011 again after the first lawsuit was settled. The homeowners seek to hold Bank of America accountable for the mortgage servicing giant's failure to correct its records and stop the wrongful reporting once and for all. The case is Zotta v Bank of America, USDC ED MO. Case No. 4:17 CV 818.
Humphreys Wallace Humphreys P.C. is a consumer protection law firm that represents homeowners subjected to wrongful mortgage servicing practices like those alleged by the Zottas against mortgage servicing giants, including Bank of America, Mr. Cooper/Nationstar, PHH, SLS, Freedom, Carrington, Caliber, and Fay, to name just a few. Contact our law firm for a free consultation if you need consumer protection trial lawyers fighting for your rights.