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Thursday, 31 May 2012 00:42

Court cuts mortgage debt due to bad faith by bank.

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An Acting State Supreme Court Justice in Suffolk County cut down Bank of America’s mortgage balance due to the conduct of the bank and apparently its attorneys.  Bank of America was cited for repeated and persistent failure to comply with lawful orders of the Court, including those which directed the production of the servicing agreement.  The litigation occurred over a 34- month period of time.  The Justice ruled the bank acted, “wholly devoid of even so much as a scintilla of good faith in negotiating in good faith.”  The bank was ordered to produce its pooling and servicing agreement and it took the bank nearly six months to produce the agreement.  The bank’s attorneys indicated this agreement prohibited it from writing the loan down or negotiating.  Once the agreement was produced, the bank’s attorney conceded that there was no absolute bar for principal reductions.  The bank was ordered to pay the borrower $200,000.00 as a sanction, which would then write down the $493,000.00 mortgage.

This information is included in Volume 247, number 76 of the New York Law Journal dated April 20, 2012.

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