In 1980, 60% of Americans had confidence in their bank. But these days, U.S. residents might be right to be a bit more skeptical of financial institutions, as is illustrated by the ruling on a recent court case. After subjecting one California couple to a house foreclosure of horrors, a judge has ordered that Bank of America pay a $46 million fine.
The case has taken some unbelievable twists and turns since it began in 2009, when Erik and Renee Sundquist sought a loan modification for their Sacramento home. While they originally secured the mortgage from another lender, Bank of America had subsequently taken over the institution. They instructed the Sundquists that they should cease their monthly mortgage payments, as defaulting was supposedly a precondition for loan modification.
The couple did so, reluctantly, and were then led on “a not-very-merry chase by inviting and entertaining mortgage modifications [Bank of America] had no intention of granting,” according to the 107-page ruling handed down by U.S. Bankruptcy Court Judge Christopher Klein.
Judge Klein went on to say, the “game of cat-and-mouse” continued: “With one paw, Bank of America batted the debtors between about 20 loan modification requests or supplements that routinely were either ‘lost’ or declared insufficient, or incomplete.”
In 2010, the couple was forced to file for bankruptcy. More than 1.5 million people file for bankruptcy in the average year, but the Sundquists never should have had to. What’s more, that filing should have stopped foreclosure proceedings on their house, but Bank of America still served them with an eviction notice. State laws do exist to regulate eviction notices, but one out of every 200 homes will be foreclosed upon. But in this case, the foreclosure was a mistake.
The couple vacated the home in favor of a rental property but later found out — and not through formal notification from Bank of America — that their house still belonged to them. But in their absence, the home had been looted and major appliances had been taken. They also received a $20,000 fee from their homeowners association due to neglected landscaping.
The damage the Sundquists sustained in the ordeal wasn’t just financial. Erik Sundquist attempted suicide, and Renee now suffers from PTSD, which caused her to lose her job. Their children were constantly fearful of the Bank of America agents who showed up at their home banging on their doors.
In his ruling, Judge Klein found the actions of the bank to be “brazen” and “heartless,” saying the ordeal was a “Kafkaesque nightmare” for the couple.
“There comes a point at which this case is reminiscent of Watergate: the denial and cover-up becomes worse than the crime,” said Judge Klein. “This conduct has been callous; nay, cruel.”
In the ruling, Judge Klein found Bank of America to be guilty of “foreclosing on the Sundquist residence, prosecuting an unlawful detainer action, forcing them to move, secretly rescinding the foreclosure, failing to protect the residence from looting, refusing to pay for Sundquist property lost, and subjecting the Sundquists to a mortgage modification charade.”
The judge ruled that the couple would receive $1.075 million in damages, and that Bank of America would be fined $46 million. Klein explained that those fines would be paid to consumer advocacy groups and law schools in order to serve as a “deterrent function” to lenders who might use similar tactics.
Rick Simon, Bank of America spokesman, called some of Klein’s findings “unprecedented and unsupported,” stressing that the Sundquists’ issues predated the institution’s newest loan practices. Simon did not specify whether Bank of America will appeal the ruling, but according to a statement made to the Observer, the bank may be planning on it.