ALBANY (CN) - Bank of America and Countrywide Home Loans destroyed mortgage documents, and "recreate" them by "insert(ing) data as they see fit," to cover up their own failure to keep records - or their fraud - according to a federal RICO class action.
"To cover up the servicing mistakes and fraud and misrepresentation in the servicing of a consumer escrow, Defendants 'recreate' letters, insert data as they see fit, and fail to produce the entire HUD complaint form. This way, a consumer is left in the dark about the fraud that occurred to them," the complaint states.
Lead plaintiff Kim Gorham says that when she sent a letter seeking information about her escrow account, she was informed that it had been "destroyed by a letter opener."
After repeated requests, Gorham, who is blind, received her purported escrow analysis, but it was "100 percent illegible," according to the complaint. The defendants knew that Gorham was legally blind, the complaint states.
She says that getting a "clear and concise" statement from the defendants has been an "impossible task."
Countrywide routinely responded to customers' requests for records by claiming they were "unavailable or destroyed," according to the complaint.
Gorham says a Countrywide lawyer wrote her that copies of her escrow statements and analyses were "not retained."
Statutory law requires that such records be kept for 5 years, the plaintiffs say.
Mortgage servicers have a "statutory duty to send consumers an annual escrow analysis and statement, advising the consumer of their escrow, monthly payment, and how it is calculated based on taxes," the class claims.
The information is especially important with an escrow addition to a mortgage, which "throws consumers off," as principle and interest tend to fluctuate.
The class is estimated at 10,000. They claim the documents they received from the subprime lender were "incorrect or incomplete." The records allegedly were tailored to cover up misrepresentations, and to "ward off lawsuits such as the instant one."
BAC Home Loans is also named in the complaint.
BofA acquired Countrywide in 2008 for $4.1 billion. Federal officials are investigating Countrywide for claims that it misrepresented losses on subprime mortgages.
Records in this complaint allegedly were destroyed in an attempt to suppress damaging information.
The class seeks damages for RICO violations, conspiracy and failure to produce records.
They are represented by Richard L. DiMaggio of Glenville, N.Y.
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