SACRAMENTO, Calif.–Bank of America was called “brazen” and “heartless” by a bankruptcy judge here who has fined the bank $45 million for its treatment of one California couple.
Judge Christopher Klein of the U.S. Bankruptcy Court in Sacramento ruled that the bank’s mortgage modification process and mistaken foreclosure on the home of Erik and Renee Sundquist left them in “a state of battle-fatigued demoralization.” In his ruling, he further pointed to what he said were systemic problems, saying the bank had little incentive to alter the mortgage terms and “kill a goose that keeps laying 6% golden eggs,” referring to the interest rate that the bank collected, according to the Wall Street Journal.
The fine money, earmarked mostly for law schools and consumer advocacy organizations, is meant to be large enough that it won’t “be laughed off in the boardroom as petty cash or ‘chump change’,” Judge Klein said in the ruling, according to the Journal. “It is apparent that the engine of Bank of America’s problem in this case is one of corporate culture…not rogue employees betraying an upstanding employer.”
In a statement to the Wall Street Journal, Bank of America spokesperson Rick Simon said the couple’s troubles began before new loan processes were established and called some of Judge Klein’s findings “unprecedented and unsupported.”
In 2008, the Sundquists’ construction business closed during the economic downturn and they bought a less-expensive home outside of Sacramento, borrowing approximately $590,000 from a lender later taken over by Bank of America with a promise from a loan official that they could request lower monthly payments.
The Sundquists stopped making payments in March 2009 after Bank of America officials said they wouldn’t consider loan modifications for customers who were current on payments, according to the Wall Street Journal. In the following years, their roughly 20 loan modification requests “routinely either lost or declared insufficient, or incomplete or stale or in need of resubmission or denied without comprehensible explanation,” according to the judge’s ruling.
The Journal reported that the couple filed for bankruptcy in June 2010. Filings halt foreclosure sales, but the ruling said the bank still improperly took over the home and gave them a three-day eviction notice. The couple moved out, and Ms. Sundquist was hospitalized with stress-related heart attack symptoms several weeks later.
Bank of America officials later reversed the sale. The couple wasn’t formally notified of the change but moved back in several months later, the ruling said.
In the interim, the couple’s homeowner association fined them $20,000 for dead landscaping.
The Journal reported that the 107-page opinion included excerpts from Renee Sundquist’s journal that documented harassing visits from bank-related officials and Mr. Sundquist’s suicide attempt after the couple discussed their frustrations over the house.
The judge awarded the couple nearly $1.1 million and clarified the amount they owe on their mortgage as $584,893.97.