Mahoney v. Bank of America – Case Proceeds Against Bank of America For Failing to Provide Reinstatement Information
Posted On: June 2nd 2014
In Mahoney v. Bank of America, No. 13-CV-2530 W(JMA), decided on May 27, 2014, a federal court judge refused to dismiss causes of action for negligence, breach of contract, and specific performance against Bank of America and Nationstar. The homeowner plaintiffs filed the suit after Bank of America bungled their loan modification application, accepted $50k of liquidated retirement funds from the plaintiffs to reinstate the loan, and then failed to provide any proof of accounting that Bank of America applied the $50k payment to the loan. In fact, after the plaintiffs paid Bank of America the $50k, it assigned the servicing of the loan to Nationstar, who similarly, had no accounting of the $50k payment. Like Bank of America, Nationstar ignored the plaintiffs’ requests for an accounting and proceeded with foreclosure.
Judge Thomas Whelan found most of Bank of America and Nationstar’s arguments in support of their request to dismiss the case unpersuasive and ruled that the plaintiffs could proceed with their causes of action. The court made clear that Bank of America and Nationstar did owe a duty of care to provide the plaintiffs with an accounting of their loan and process their loan modification in a reasonable manner.
This ruling demonstrates that servicers and lenders must provide homeowners with accurate and non-misleading information in the loan modification process– particularly when asked for reinstatement information to cure a default.
Read the ruling here: Mahoney v Bank of America Nat Ass’n