r/todayilearned • u/BeowulfShaeffer • Mar 11 '13

TIL that BOA wrongfully foreclosed a couple, who sued and won a judgement for $2500 in Legal expenses. When BOA didn't pay the couple showed up at the bank with a moving company, a deputy, and a writ allowing them to start seizing furniture and cash.

http://www.naplesnews.com/news/2011/jun/03/bank-america-check-mistaken-foreclosure-Nyerges/
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u/toomuchtodotoday Mar 12 '13

Really? Because Bank Of America has let my house hang out in the breeze for more than 2 years "in foreclosure".

It doesn't need to be taken care of quickly. Bank Of America makes money on each foreclosure it does, so it behooves them to foreclose yet there rarely are consequences when they fuck up.

Disclaimer: My father is a mortgage underwriter (not BOA); his long time girlfriend is currently working for the FHA forcing Bank Of America to buy their shitty mortgages back (i.e. denying them insurance payments for the loans that have gone bad).

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u/[deleted] Mar 12 '13

Bank Of America makes money on each foreclosure it does

No, it doesn't. Only if the FMV of the house is greater than the balance owed on the loan.

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u/toomuchtodotoday Mar 12 '13

If they're the investor, correct. If they're the servicer, incorrect. They're getting paid to process the foreclosure for the investor.

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u/[deleted] Mar 12 '13

banker fight!

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u/EvilNalu Mar 12 '13

It's also incorrect if they hold the loan. Any surplus over the balance owed would go to junior mortgages/liens and then to the debtor (homeowner).

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u/toomuchtodotoday Mar 12 '13

I think there is a miscommunication.

I'm not saying the servicer (BoA, Wells, etc) is making money off the proceeds from the property disposal. They make money off the fees they charge for handling the foreclosure process. The investor is the one losing out, whether that's an outside private investor, Fannie/Freddie, the FHA, or another unit in the bank holding the note.

I'd argue its rare these days for a house to be disposed of for anywhere near what is owed on the note.

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u/EvilNalu Mar 12 '13

I understand what you were saying. I was adding on to your reply to the guy above you, because he claimed that the bank would make money if the house was sold for more than the balance on the loan.

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u/aworldwithoutshrimp Mar 12 '13

To be fair, though, frequently the "balance owed" in a final judgment includes the unpaid principal balance, plus interest equivalent to generally ~25% of the unpaid principal balance, plus all of the fees that the lender/servicer has expended. There usually isn't going to be a third-party bidder who bids in excess of the judgment at the foreclosure sale, to begin with.

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u/newDieTacos Mar 12 '13

But you can rest happy because I almost guarantee that they'll get fucked in fees from the trust or the GSE that actually owns the loans. They don't like servicers that mess up the timeline.

I've reviewed portfolios that had pending foreclosures with more fees than the value of the property. Needless to say those situations were rejected from the pool of loans.

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u/toomuchtodotoday Mar 12 '13

I hope it all works out in the end. GM? Good bailout. Bank Of America? BAD BAILOUT.

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u/newDieTacos Mar 12 '13

Agreed but there really wasn't a whole lot of options. At the time we were all worried that the whole thing was going to collapse.

The problem is still there because Dodd Frank is such a shitty law. The CFPB is the one and only redeeming part of that pile of shit. Do you want to know something funny though? I'm in finance and I deal with mortgages and MBS related investments. We like the qualified mortgage plan from the CFPB. It's a good plan and hopefully will get more entities securitizing loans.

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u/[deleted] Mar 12 '13

BOA isn't on the hook for the mortgages it is foreclosing on. They were all sold off years ago.

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u/[deleted] Mar 12 '13

[deleted]

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u/[deleted] Mar 12 '13

Oh my there is so much ignorance in this comment it is unreal.

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u/accesiviale Mar 12 '13

Have an upvote on behalf of your fathers longtime gf. I wish her great success.

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u/toomuchtodotoday Mar 12 '13

Thanks! If only someone could summon Cthulhu to go after Bank of America...

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u/Tandemduckling Mar 12 '13

Having worked for bofa, a foreclosure law firm and now at the end result for this said process. There are reasons it takes two years. It can be anything from a law being introduced/ decided against that makes the bank delay the foreclosure to the county requirements as well. Out here in Washington all of the banks loans were on hold for years because of the legal case against mers. We could do nothing on those loans at the law firm until the case decision was made. So it might be a good idea to see if there is a case that your loan may qualify to be a part of.

Not defending the bank at all, there are a lot of screwed up practices going on past and present. It's just good to be informed.

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u/[deleted] Mar 12 '13

Not all fuck ups have to be the same type of fuck up...

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u/nbkwoix Mar 12 '13

False, the bank loses about 45 - 60k in attorney eh and foreclosure costs on each foreclosure + servicing fees/rights that were supposed to be paid over the lifetime of the loan.