Questioning Bank of America’s Consumer Relief Measures

Is Bank of America upholding its promise to provide consumer relief when it comes to mortgages and other kinds of loans? According to a recent article in the New York Times, “questions are arising about whether the promised assistance is actually getting to the right people and whether the bank will be allowed to claim credit for consumer relief that far exceeds its actual value.” In other words, questionable dealings concerning foreclosure and consumer bankruptcy might still be lurking.
Consumer Relief and the Terms of the Settlement
Last summer, Bank of America agreed to a $16.7 billion settlement “over dubious mortgage practices.” Of the money from that settlement, $7 billion was supposed to go toward consumer relief measures, including loan modifications in the years following the agreement. In addition, the settlement required the bank to “make a wide array of loans more affordable for borrowers” and to “forgive or reduce the amounts owed on first and second mortgages.” As compensation for these actions, Bank of America “would receive credit for these reductions in dollar amounts outlined in the settlement.”
But the bank doesn’t appear to have come through for many borrowers. To be sure, consumers have reported that Bank of America contacted them to say that certain debts—already discharged in a consumer bankruptcy proceeding—would be “forgiven.” For instance, one consumer filed for Chapter 7 back in 2010 and had debts with Bank of America extinguished, including a home equity line of credit for more than $54,000. The consumer, however, received a letter from Bank of America that offered her “a full principal forgiveness” on that loan.
While the consumer isn’t responsible for the debt, if she doesn’t “opt out” with Bank of America, the bank will be able to claim a credit for this type of loan forgiveness action. Richard Simon, a spokesperson for Bank of America, indicated that in situations like the one just described, the bank’s crediting “would be limited to a maximum of 40 percent of the total amount extinguished.” However, John Rao, an attorney with the National Consumer Law Center, described such crediting as “excessive.”
Timing and Consumer Contact
Did you recently receive a letter from Bank of America approving you for forgiveness on a loan previously discharged through bankruptcy? You’re not alone. According to the article, the bank “receives extra credit under the settlement” if it offers consumers certain kinds of relief by a deadline—August 31st of this year. And much of that relief appears to be coming to consumers who won’t benefit as much as the bank will. Currently, hundreds of bankruptcy attorneys across the country have clients who have received promises of loan forgiveness after a bankruptcy discharge, totaling hundreds of thousands of dollars.
While it’s possible that Bank of America didn’t have knowledge of the bankruptcies before sending out letters concerning loan forgiveness, it seems very disingenuous that the bank could receive credit for this type of consumer “relief.”  
If you have questions or concerns about how Bank of America’s consumer relief measures might affect you, it’s important to speak with an experienced Oak Park consumer protection attorney. Don’t hesitate to contact a dedicated advocate at the Emerson Law Firm.
See Related Blog Posts:

Comments

Post a Comment

Popular posts from this blog

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti...
Read more