Bank of America is in trouble again… this time Robbins Geller Rudman & Dowd LLP announced a class action lawsuit has been filed on behalf of an institutional investor in the U.S. District Court for the Southern District of New York against Bank of America Corporation (BofA). (Learn more tonight in my Free Foreclosure Investor Webinar at 6pm PDT, 9pm EST. Details here.)
The allegation is that the defendants issued materially false and misleading statements regarding the company’s business. Defendants concealed defects in the recording of mortgages and improprieties with respect to the preparation of foreclosure paperwork that harmed BofA’s investors when BofA had to temporarily discontinue foreclosures and admit to the problems it was experiencing.
For much of the class period, defendants also concealed that BofA had previously engaged in a practice known as “dollar rolling,” wherein it omitted billions of dollars in debt from its balance sheet reported to the public. As a result of defendants’ false statements, BofA’s stock traded at artificially inflated prices during the class period, reaching a high of $19.48 per share on April 15, 2010.
According to the complaint filed, the true facts, which were known by the defendants but concealed from the investing public during the class period, were as follows:
►BofA did not have adequate personnel to process the huge numbers of foreclosed loans in its portfolio;
►BofA had not properly recorded many of its mortgages when originated or acquired, which would severely complicate the foreclosure process if it became necessary;
►Defendants failed to maintain proper internal controls related to processing of foreclosures;
►BofA’s failure to properly process both mortgages and foreclosures would impair the ability of BofA to dispose of bad loans; and
►BofA had engaged in a practice known internally as “dollar rolling” to remove billions of dollars of debt from its balance sheet over the prior years.
For more information on this lawsuit, visit www.rgrdlaw.com.
This is not good news for BofA stockholders. I wonder what impact this news will have on the selling of their short sales and REOs? From what I have heard/found, using BofAs (and GMACs) Equator online system, which is not perfect, it is much better than many lender systems out there. (The Equator system is a workflow system that handles short sales, with it’s primary aim of reducing the waiting time related to short sales and effectively keeping foreclosure at bay while the short sale is being completed.)
The million dollar question is, “will they approve more wholesale deals to move more properties?” That would be a boon for investors. Stand by for more details here as they unfold…
And make sure you join me Tonight, in my Free Live, Foreclosure Investor Webinar at 6pm PDT, 9pm EST and learn…
- Discover the changes in the 2011 housing markets, and the new plan to find great insider deals right now.
- Find Out the Pros and Cons to each foreclosure buying system (PreForeclosures, Auctions, REOs and Short Sales) and the best way to find the most profitable deals in your own backyard.
- Understand what lenders are really doing with their flood of Short Sale and REO foreclosures — and how to leverage that into increased profits on every deal.
- Learn how to use Foreclosures.com Foreclosure Listings to beat your competition – and find and close insider deals that are not on the market (aka: phantom foreclosures) FIRST.
- Hear first-hand from actual investors and learn their successes and failures working this market to make big money in foreclosures.
- Determine how you can quickly flip your first deal — and make profits in foreclosures — without using any of your own money or credit.
- Hurry, Register Now to this Free Event, before we Run out of Spots! Online or Call 800-310-7730 x2