Tuesday, August 13, 2013

Bank of America Accused of Securities Fraud

Just last week, the government filed two lawsuits against Bank of America for securities fraud.  According to the Justice Department, the bank perpetrated “a fraud on investors involving nearly a billion dollars of residential mortgage-backed securities.”  Both the Justice Department and the U.S. Securities and Exchange Commission filed suits in the U.S. District court in Charlotte, according to a report in CNBC Business News.
This news highlights that the housing crisis isn’t over yet.  Many Americans are still feeling the effects, and the government continues to look into possible causes for the real estate collapse.  If you’re at risk of foreclosure, don’t hesitate to contact and experienced foreclosure defense attorney today.
Details of the Government Claim Against Bank of America
When did these crimes allegedly occur?  According to the court filings, the securities go back to around January 2008, which is toward the beginning of the financial crisis and the housing market collapse.  Bank of America has issued statements denying the allegations.  According to a statement published by CNBC, a Bank of America spokesperson said, “these were prime mortgages sold to sophisticated investors who had ample access to the underlying data.”  The bank went on to argue, “we are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result.”
However, when the Guardian reported on recent news, it made clear that the fraud claims are no small matter.  Indeed, the U.S. government has accused the bank of fraud related to residential mortgage-backed securities worth $850 million.  The lawsuits are coming close on the heels of Bank of America’s $45 billion settlement related to the foreclosure crisis.
The residential mortgage-backed securities are known as BOAMS 2008-A.  According to the Guardian, they were “of a higher credit quality than subprime mortgage bonds,” and they’re “dated to about January 2008,” was which “months after many Wall Street banks first reported billions of dollars in writedowns on their holdings of subprime mortgage securities.”
The lawsuits were filed in Charlotte, NC, where the headquarters of Bank of America are located.  The claims from both the Department of Justice and the U.S. Securities and Exchange Commission argue that Bank of America made “misleading statements” and failed to “disclose important facts about the pool of mortgages underlying a sale of securities to investors in early 2008.”
According to the Justice Department, “these misstatements and omissions concerned the quality and safety of the mortgages collateralizing the BOAMS 2008-A securitization, how it originated those mortgages, and the likelihood that the ‘prime’ loans would perform as expected.”  In its statement surrounding the case, the Justice Department also made clear that the “material number of mortgages in the pool failed to materially adhere to Bank of America’s underwriting standards.”  In other words, both the Department of Justice and the U.S. Securities and Exchange Commission claim that Bank of America employed fraudulent mortgage practices for which they haven’t yet compensated those who were negatively affected.
We’ll have to wait and see if the cases result in more hefty financial settlements from Bank of America.  In the meantime, if you have been negatively affected by bank practices or are at risk of foreclosure in our state, the experienced foreclosure defense lawyers at Emerson Law Firm can discuss your case with you today.
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  1. Nice Post ! Thanks for sharing. This blog is very informatics about Foreclosure frauds.I want to more information in future.
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  2. Nice post, Bank of America have new rules to stop fraud investors from investing. now fake documentory will be very less.
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  3. Govt. of USA thinks so much to the people of their country . they make so much plans and terms which helps so much in banking and securities. Abogados De Bancarrota Los Angeles County