The brouhaha over mortgage servicing mishaps and snafus doesn’t seem to be having much effect on Bank of America Corp (NYSE:BAC)‘s share price, particularly with all of the drama surrounding the Federal Open Market Committee’s meeting, which did a bit of market roiling all on its own.
However, a lawsuit under way in Boston, alleging that Bank of America Corp (NYSE:BAC) deliberately derailed loan modifications offered under the government’s Home Affordable Modification Program, as well as the underwhelming National Mortgage Settlement monitor’s report released this week, have been attracting media attention.
Both of these issues are likely to have a negative effect on Bank of America Corp (NYSE:BAC)’s already tarnished customer-service reputation and might wind up costing the big bank additional wads of cash, if California state Representative Maxine Waters has her way.
HAMP incentive payments at issue
Waters, a ranking Democrat on the House Financial Services Committee, recently sent a letter to several government entities, including the Office of the Comptroller of the Currency, the Federal Reserve, and the Special Inspector General for the Troubled Asset Relief Program. Alerted by an article in Bloomberg concerning the homeowners’ lawsuit, Waters notes that Bank of America was the recipient of $992 million in HAMP loan modification incentives — not to mention the oodles of cash it was handed as part of TARP.
Of course, the current loan modification suit puts the spotlight squarely on Bank of America Corp (NYSE:BAC), but the report from settlement monitor Joseph A. Smith shows that each of the Big Four have had their problems in that area. Both Bank of America and JPMorgan Chase & Co. (NYSE:JPM) failed on two of at least 12 benchmarks used to assess the banks’ progress on the settlement, and Citigroup Inc (NYSE:C) and Wells Fargo & Co (NYSE:WFC) were lax on one each. JPMorgan Chase & Co. (NYSE:JPM) and Citigroup Inc (NYSE:C) both had the good grace to admit their failures and declare that they were working on fixes; Wells Fargo & Co (NYSE:WFC) and Bank of America Corp (NYSE:BAC) had no comment, which, for the latter, may only make it look even less sympathetic in the public opinion.
Another lawsuit in the making?
It remains to be seen whether Waters’ request will prompt any action. Her letter asks that servicers that “you have reason to believe” were involved in any fraudulent behavior regarding HAMP be investigated — with Bank of America Corp (NYSE:BAC) being specifically mentioned, of course, because of the testimony in Boston.