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Friday, August 24, 2012

National Mortgage (DOJ) Settlement Controls Which BOA Affiliated Servicers?

National Mortgage (DOJ) Settlement Controls Which BOA Affiliated Servicers?


The federal lawsuit filed by the United States of America and 49 of the 50 states (Oklahoma being the exception) in March 2012 named 18 mortgage loan servicing entities as defendants. All of the defendants are or were affiliated with Bank of America, Citigroup, GMAC/Ally Financial, J.P. Morgan Chase, and Wells Fargo. Bank of America and the others more or less pled “no contest” and agreed to monetary sanctions, new and improved mortgage loan servicing standards, and other concessions, all without admitting any specific wrongdoing. As a result, a “consent judgment” of 310 pages was entered against Bank of America with the United States District Court for the District of Columbia on April 4, 2012.


This series of events led to what is commonly referred to as the “National Mortgage Settlement” (NMS) or sometimes the “Department of Justice Settlement” (DOJ Settlement). For borrowers who may be entitled to relief as result of this settlement (“Potentially Eligible Borrowers”), it can be confusing as to whether a particular borrower’s mortgage loan, mortgage lender, and/or mortgage servicer is covered by the NMS and eligible for some of the $8.5 billion required to be paid by BOA toward borrower relief. Here is what the settlement related documents tell us on that topic with regard to BOA in particular.


The complaint lists the following BOA related defendants: Bank of America Corporation; Bank of America, NA; BAC home loans servicing, LP f/k/a Countrywide Home Loans Servicing, LP; Countrywide Home Loans, Inc.; Countrywide Financial Corporation; Countrywide Mortgage Ventures, LLC; and Countrywide Bank, FSB.


The consent judgment, not very helpfully, lists the defendants as “Bank of America Corp., et al.” in the case style (header). It then goes on to refer to the above mentioned entities and says that it will refer to them “collectively, for the sake of convenience only, ‘Defendant’” (emphasis added). Here, on page 2, the consent judgment starts to use the term “Defendant” without further specifying which entities are referred to (if not all of them).


In Exhibit A, the consent judgment states “References to ‘Servicer’ shall mean Bank of America, NA and shall include Servicer’s successors and assigns these in the event of a sale of all or substantially all of the assets of Servicer or of Servicer’s division(s) or major business unit(s) that are engaged as a primary business in customer-facing servicing of residential mortgages on owner-occupied properties.”


In Exhibit F, the consent judgment appears to refer to BOA as the “Company”. In describing the servicing of mortgage loans, it refers to “all activities of the Company, of any affiliated entity during or prior to such time it was an affiliated entity, and all of the current or former officers, directors, employees and agents of any of the foregoing, directed toward servicing ….”


In Exhibit G, the consent judgment uses the term “Bank” and defines it as “Bank of America Corporation, as well as its current and former parent corporations or other forms of legal entities, direct and indirect subsidiaries, brother or sister corporations or other forms of legal entities, divisions, or affiliates, and the predecessors, successors, and assigns of any of them, as well as the current and former directors, officers, and employees of any of the foregoing.”


Exhibit I, the last exhibit to the Bank of America consent judgment, is titled “Bank of America/Countrywide Settlement Agreement”. As an aside, is only the consent judgments against BOA and GMAC which have an Exhibit I; the consent judgments against Citi, Chase and Wells Fargo stop at Exhibit H. Importantly, there is a subsection in Exhibit I of the consent judgment titled “Definitions”. In that subsection, “Affiliated Entity” is defined as follows: “Affiliated Entity means entities that are directly or indirectly controlled by, or control, or are under common control with, Bank of America Corporation as of or prior to 11:59 PM Eastern standard Time on February 8, 2012. The term ’control’ with respect to an entity means the beneficial ownership (as defined in rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 50% or more of the voting interest in such entity.”


Wow. Now that we have slogged through all of this (you can thank me later for having trolled through the 310 pages of the consent judgment), what is the answer to the question that we started this article with? As best we can tell, the terms of the consent judgment for Bank of America in relation to the National Mortgage Settlement apply to the following mortgage loan servicers (and yes I realize that some of these entities don’t really exist any longer):



  • Bank of America Corporation;

  • Bank of America, NA;

  • BAC home loans servicing, LP f/k/a Countrywide Home Loans Servicing, LP;

  • Countrywide Home Loans, Inc.;

  • Countrywide Financial Corporation;

  • Countrywide Mortgage Ventures, LLC;

  • Countrywide Bank, FSB; and

  • Entities that are directly or indirectly controlled by, or control, or are under common control with, Bank of America Corporation as of February 8, 2012.


As to this last bullet point, we’ll be keeping our eyes open and will attempt to further identify/name such entities. 


McGrath & Spielberger, PLLC provides assistance to borrowers in need of mortgage relief services, such as mortgage loan modification, foreclosure negotiation, refinancing, and deed-in-lieu or other negotiated settlement resolutions.