GEORGE vs URBAN SETTLEMENT SERVICES d/b/a URBAN LENDING SOLUTIONS; BANK OF AMERICA, N.A. | Colorado Class Action - Bank of America & Urban Lending Sued for Racketeering (RICO) on Fraudulent “Modification” Program
UNITED STATES DISTRICT COURT DISTRICT OF COLORADO
RICHARD GEORGE; STEVEN LEAVITT and SANDRA LEAVITT, and all others similarly situated Plaintiffs, v. URBAN SETTLEMENT SERVICES d/b/a URBAN LENDING SOLUTIONS; BANK OF AMERICA, N.A. Defendants.I. INTRODUCTION
1. In early 2009, Bank of America (“BOA”) took more than $45 billion in government bailout money. As a condition of receiving this bailout, BOA agreed to participate in the Home Affordable Modification Program (“HAMP”) – a detailed program designed to stem the foreclosure crisis by providing affordable mortgage loan modifications and other alternatives to foreclosure to eligible borrowers. BOA signed a contract with the U.S. Treasury on April 17, 2009 agreeing to comply with the HAMP requirements and to perform loan modification and other foreclosure prevention services described in the program guidelines. 2. Though BOA accepted billions of dollars and contractually agreed to comply with the HAMP directives and extend loan modifications to eligible homeowners, BOA has systematically and deliberately worked to sabotage HAMP and to modify as few mortgages as possible according to its terms. BOA found it was more profitable if homeowners accepted inhouse modifications rather than the loan modifications mandated by the HAMP process. Consequently, BOA pushed homeowners who were applying for HAMP modifications toward more expensive in-house modifications using tactics of outright fraud. 3. Rather than working diligently to reduce the number of loans in danger of default by establishing permanent modifications, BOA serially strung out, delayed, and otherwise hindered the modification processes that it agreed to facilitate. BOA’s delay and obstruction tactics have taken various forms with the common result that homeowners with loans BOA serviced, and who met the requirements for participation in HAMP, did not get a fair opportunity to secure a permanent loan modification through the HAMP process. 4. To accomplish its objectives, BOA created a widespread RICO enterprise to defraud homeowners who sought modifications and then acted as the kingpin of that enterprise. BOA enlisted Defendant Urban Settlement Services (d/b/a Urban Lending Solutions, referred to hereinafter as “Urban”) to act as a member of the RICO enterprise and assigned to Urban key aspects of the process of administering HAMP, including interacting with homeowners seeking HAMP modifications, collecting and processing documents from homeowners, and corresponding with homeowners. BOA and Urban worked in concert, under BOA’s direction and for many years, to frustrate the HAMP process and to prevent as many homeowners as possible from obtaining permanent loan modifications that complied with HAMP while allowing BOA to maintain the appearance to regulators and the public of trying to comply with its HAMP obligations. Through this relationship and with this common goal, BOA and Urban formed an association-in-fact enterprise that was effectuated through the use of thousands of false wire and mail communications. As part of the scheme “site leaders” were told BOA would collect more money if HAMP modifications were delayed and, as such, BOA employees were instructed to delay HAMP modifications. 5. As part of the loan-modification scheme and enterprise, homeowners seeking HAMP trial plans were directed by wire and mail instructions from BOA to send financial information directly to Urban. Consumers were led to believe that they were dealing with BOA when secretly they were communicating with Urban. As part of the loan-modification scheme and enterprise, Urban became a “black hole” for documents sent by homeowners. As part of the enterprise and scheme, BOA used the mail and wires to falsely deny modifications by claiming that information required of homeowners seeking a HAMP modification had not been received, when in fact BOA and Urban had received the documents. Oftentimes consumers were led to believe they were speaking with BOA’s “Office of the President” when in fact they were speaking with Urban employees. As part of the scheme Urban employees manipulated financial records to justify ending the HAMP modifications process for homeowners. 6. Numerous former employees of both BOA and Urban report that BOA directed its employees and contractors to use the wires and mails to deliberately lie to homeowners who were in the process of trying to obtain loan modifications under HAMP. They further report a widespread and deliberate practice of knowingly issuing false notices claiming that homeowners had failed to submit required documentation and of denying HAMP applications en masse for reasons they knew to be false. These actions were taken with the full knowledge, and at the direction, of the individuals tasked with running Defendants’ HAMP modification program. 7. This scheme was conducted via interstate mail and phone lines, in thousands of documents sent via mail and overnight courier, including documents and phone calls intended to deceive borrowers into believing they would receive HAMP modifications, and letters and phone calls which were knowingly false about why borrowers were not receiving HAMP modifications. 8. Because of the BOA-Urban loan-modification scheme, hundreds of thousands of homeowners were wrongfully being deprived of an opportunity to cure their delinquencies, pay their mortgage loans and save their homes. By failing to live up to its obligations under the terms of the agreement it entered into with the Department of the Treasury, and the terms of the contracts it formed with individual homeowners, BOA has left thousands of borrowers in a state of limbo – often worse off than they were before they sought a modification from BOA. 9. On behalf of nationwide classes of borrowers, Plaintiffs state a cause of action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c), alleging that Defendants created an association-in-fact enterprise designed to mislead and deceive borrowers through use of the United States mail and wires. On behalf of the members of those classes, Plaintiffs seek declaratory relief and/or a judgment of liability. 10. In addition, on behalf themselves and statewide classes of similarly situated borrowers, Plaintiffs state claims of promissory estoppel for representations made to them by Defendants. [...]