Robo-signing redux: BofA habitually sues itself
In another symbol of the faulty paperwork America’s largest lenders used to file for foreclosures, Bank of America has sued itself 11 times in Palm Beach County, Fla. foreclosure cases since late March, the Huffington Post reported.
The suits stem from Bank of America servicing mortgages on behalf of other investors, a practice undertaken by most big banks that led to the so-called robo-signing scandal. As the servicer, the bank processes payments, negotiates with borrowers and handles foreclosure proceedings without actually owning the loan.
At the same time these banks frequently lent second liens on properties because of the high interest rates they offered in place of protection against foreclosures.
“We are servicing the first mortgage on behalf of an investor and we own the second mortgage,” a Bank of America spokesperson said. “Naming the second-lien holder in the suit is necessary to eliminate the junior interest.”
But when the lien-holder is the bank, the requirement no longer holds. Law professors told the Huffington Post that the “mindless” practice of naming itself in foreclosure suits was remarkably similar to the robo-signing issues that resulted in the collective $26 billion foreclosure settlement. [HuffPo]