BofA and BofI Duke it Out Over Mortgages

     LOS ANGELES (CN) – Bank of America and BofI Federal Bank filed battling lawsuits in Superior Court, each claiming the other breached an agreement to service mortgage loans.
     Bank of America sued BofI Federal Bank fka Bank of Internet USA, and on the same day, BofI sued Countrywide Home Loans, Bank of America and affiliates, in the same court. Bank of America bought Countrywide in 2008 after Countrywide became the poster child for the nationwide mortgage crisis.
     In its complaint, BofA claims that BofI and Countrywide Home Loans entered into a mortgage loan purchase and servicing agreement in the summer of 2000. BofA took on Countrywide’s rights and obligations to service those loans when the two banks merged in 2011.
     Bank of America claims it continued to collect payments from borrowers, advance its own money for principal and interest payments, taxes, insurance premiums, and expenses, until earlier this year, when BofI sent letters to borrowers “instructing them to remit all further payments to Bofl and not BANA [Bank of America NA].”
     The BofA complaint states: “BofI’s notices to borrowers have made it impossible or impractical for BANA to continue to perform its obligations under the servicing agreement and have deprived BANA of its contractual rights to obtain reimbursement for advances made and to obtain payment of fees earned under the terms of the servicing agreement. As a result of BofI’s material breach of the servicing agreement and its misappropriation of BANA’s servicing rights, BANA is terminating the servicing agreement.”
     But in its dueling complaint, BofI claims it was forced to become sole servicer of the loans after Countrywide failed to collect payments, improperly modified mortgages, waived loans and sanctioned “improper and unauthorized” short sales.
     BofI claims Countrywide and Bank of America failed “to use reasonable efforts to foreclose on defaulted mortgage loans including, but not limited to, failing to foreclose on first mortgages in situations where Countrywide or BofA owned the second mortgage, in order to advance Countrywide’ own interests over those of BofI.”
     BofI claims that because of those and other breaches it was entitled under the agreement to act as sole servicer of the single-family mortgage loans.
     Bank of America is represented by Robert Padway with Bryan Cave of San Francisco. It seeks more than $1 million in damages for breach of contract.
     BofI is represented by Theodore Cohen with Spolin Cohen Mainzer & Bosserman of Los Angeles. It seeks damages for breach of contract and intentional interference with contractual relationships, and a declaration that it is the sole servicer of the loans.

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