WASHINGTON – Bank of America Corp., the largest U.S. lender, “significantly hindered” a federal review of its foreclosures on loans insured by the Federal Housing Administration, the U.S. said.
The bank was slow in providing data and offered incomplete information, according to the Department of Housing and Urban Development inspector general’s office, which conducted the review.
“Our review was significantly hindered by Bank of America’s reluctance to allow us to interview employees or provide data and information in a timely manner,” William Nixon, an assistant regional inspector general for the agency, said in a sworn declaration.
The filing, dated June 1 and obtained by Bloomberg News, was submitted as an exhibit in a lawsuit by the state of Arizona against the Charlotte, N.C.-based bank. Arizona, which is seeking to interview former Bank of America employees, accused the bank of misleading homeowners who were seeking mortgage modifications.
Federal agencies and attorneys general from all 50 states are investigating the way banks service mortgage loans and conduct foreclosures. The group is in settlement talks with the five largest mortgage servicers, including Bank of America, Wells Fargo & Co. and JPMorgan Chase & Co.
Bank of America cooperated with the U.S. inquiry, said Dan Frahm, a company spokesman, adding “any suggestion otherwise is both inaccurate and inconsistent with how we work with all regulators.”
In addition to the 50-state probe, New York Attorney General Eric Schneiderman has opened a new inquiry tied to the packaging and sale of loans to investors, according to a person familiar with the matter. Bank of America is included in that probe along with other banks and bond insurers such as MBIA Inc.
The HUD inspector general’s report on Bank of America, which hasn’t been made public, was prepared “in light of possible future litigation,” according to Nixon’s declaration. Nixon, who works in Fort Worth, Texas, couldn’t be reached for comment.
The bank’s delay in providing “readily available information” also hurt the review of the bank’s processes and controls, Nixon said. The information provided in response to two subpoenas wasn’t complete, he said.
“These omissions impaired our review because they prevented us from measuring the impact of Bank of America’s foreclosure practices,” Nixon said.
