Tuesday, September 17, 2013

Bank of America asks for racketeering case to be dismissed

Bank of America is seeking the dismissal of a federal lawsuit that accuses it of operating a scheme involving home mortgage modifications.

On Monday, the Charlotte-based bank submitted its reply to the lawsuit, which was filed in July in Colorado, where co-defendant Urban Lending Solutions has operations. The suit accuses the bank and Urban of participating in a racketeering enterprise that wrongfully denied borrowers seeking modifications under the federal Home Affordable Modification Program. Urban is a contractor to whom the bank sent HAMP work.

According to the suit, Bank of America and Urban violated the federal Racketeer Influenced and Corrupt Organizations Act by operating "an association-in-fact enterprise designed to mislead and deceive borrowers through use of the United States mail and wires." Bank of America, the lawsuit says, "acted as the kingpin of that enterprise."

Bank of America, in its reply, says the RICO claim is flawed on a technical level. The bank says a RICO enterprise cannot be made of only the defendants in a case.

"Plaintiffs have attempted to evade this requirement by accusing defendants of forming an enterprise with their own employees," the bank says. "The complaint fails to describe an enterprise distinct from the defendant corporation."

The lawsuit also fails to "allege specific facts," the bank said. It called the case "one of hundreds" brought by U.S. borrowers who complained they did not receive permanent HAMP modifications "or did not receive them as soon as they would have liked."

Courts have "almost uniformly" dismissed those cases, the bank said, adding that the RICO claims are "hollow."

The bank's reply comes just weeks after a federal judge rejected a class-action request for a separate lawsuit in Massachusetts. That suit also claims borrowers were wrongly denied HAMP modifications by Bank of America.

Urban, in its response Monday to the Colorado lawsuit, says the suit fails to "specifically allege any wrongdoing" by the company. Urban is also seeking to have the case dismissed.

"Through their baseless allegations, plaintiffs impugn the sterling reputation of Urban Lending, one of the fastest-growing minority-owned companies in the United States and the nation's leading minority-owned mortgage solutions provider," the company's response says.