Wednesday, May 21, 2014

Bank of America, others gag homeowners in settlements

Bank of America is among lenders that are increasingly demanding that homeowners promise not to insult them publicly after the terms of their underwater mortgages are eased, Reuters reports, citing consumer lawyers.

The gag orders and bans on suing are appearing when borrowers use litigation to settle foreclosure and loan modification cases, the Reuters story says. Consumer lawyers say the gag orders and bans are also popping up when mortgage servicers modify loans outside of the courts in what are known as "ordinary loan modifications."

The concern, lawyers say, is the clauses can hurt borrowers who later have issues with their mortgage collector by preventing them from complaining publicly or suing. 

Bank of America spokesman Rick Simon said the Charlotte-based bank doesn't include non-disparagement clauses and releases of claims in the course of ordinary loan modifications, only in ones involving negotiated legal settlements, according to the story. Waivers don't preclude customers from filing suits on post-settlement issues, he said.

Consumer lawyers are overstating the importance of the clauses, attorneys for lenders and mortgage servicers say, according to the story. Banks don't want to be sued again for the issues resolved in the settlement, but they realize they may be sued if they are responsible for a future wrong, said Martin Bryce, a partner with Ballard Spahr in Philadelphia who specializes in consumer finance and banking.

By the way, here's Bank of America's full response to the Reuters story: 

We do not include non-disparagement clauses or releases of claims in normal modification agreements.

Non-disparagement and related confidentiality clauses may be part of negotiated settlements that provide additional consideration to the customer.

Any waiver of future claims only applies to matters that occurred up to the time of the settlement and does not preclude the customer from filing suits on post-settlement issues.


Anonymous said...

Crooks and thieves.

Anonymous said...

In the 1920s they would have called this organized crime! Leave it to a bank to impede one's right under the First Amendment!

Anonymous said...

This is EXACTLY what they had folks who got LAID OFF sign.

So it's no surprise that the legal time isn't 'rubber stamping' the clause on every form signed that has BoA letter head on it.

Anonymous said...

It's consistent with BofA paying $60,000,000,000 in fines and to repurchase bad loans but stating that it was done to bring closure and was not an admission of any wrongdoing.