As announced in late 2019, Bank of America North America has agreed to pay $35 million to settle the borrower class action lawsuit that accused the company of failing to comply with a California law requiring banks to pay interest on mortgage escrow accounts. The settlement amounts to almost 75% of the escrow interest BofA allegedly failed to pay California borrowers, and as noted by Law360 “will resolve a years-old case that raised questions about national bank preemption powers and nearly reached the U.S. Supreme Court.”
As plaintiffs’ counsel noted, “In negotiating the settlement, the parties and their counsel were well informed about the issues, the relative strengths and weaknesses of their respective positions, and about the risks faced by each side of continued litigation.” The January 2020 settlement filing notes that Bank of America has already enacted changes to its policies and practices, and in 2019 began paying escrow interest to all residential mortgage escrow accounts in California.
Earlier in the Litigation
Lieff Cabraser represents California homeowners in class action litigation against Bank of America alleging BofA fails to comply with a California law that requires banks to pay interest on mortgage escrow accounts.
In 2010, the United States Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act which included provisions to correct abusive and deceptive lending practices that contributed to the mortgage crisis, specifically with regard to the administration of escrow accounts. Recently, the Ninth Circuit Court of Appeals rejected Bank of America’s assertion that the California law requiring the payment of interest on mortgage escrow accounts could not applied to it, despite Congress’s enactment of the Dodd-Frank Act.
Bank of America must now face the lawsuit that seeks to compel the bank to pay interest on the funds consumer borrowers hold in their mortgage escrow accounts. The suit also brings breach of contract claims against the bank, as plaintiff’s mortgage language specifically required Bank of America to pay escrow interest if applicable state laws require it. BofA refused to pay the required interest even though some other national banks in California do.
If you have a mortgage with Bank of America or any other California bank on which you suspect interest was not paid as mandated by California law, please contact us today about your case. The information you provide will assist us in learning of the full extent of the alleged fraud and in obtaining damages for affected customers, including all profits that may have been unjustly earned by the companies. We will review your complaint for free and without any obligation on your part.