Bank of America drops suit against bankruptcy trustee
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Bank of America drops suit against bankruptcy trustee
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Piggybankblog posted 08/17/12
Cross linked with bizjournals.com
Charlotte, N.C.-based Bank of America (NYSE: BAC) has dropped its legal attack on Nashville’s Chapter 13 bankruptcy trustee.
Earlier this year, as part of a consumer bankruptcy proceeding, Bank of America became the first lender to sue a Tennessee trustee of the court.
In an agreement filed Thursday, Bank of America worked out a deal directly with the debtors — dropping accusations that Chapter 13 trustee Henry “Hank” Hildebrand wasn’t dispersing money appropriately.
“They decided they would dismiss the lawsuit, pay my attorney fess and they apologized,” Hildebrand said.
In essence, Bank of America argued that it shouldn’t have to file a claim in the bankruptcy proceedings. That argument is tangential to efforts seeking an end to a common defense tactic used by debtors and foreclosure judges in the aftermath of the mortgage meltdown. Known as “show me the note,” the tactic forces a lender to offer up physical documentation that they actually own the mortgage.
In this case, Bank of America failed to file a timely claim, which included the failure to show documentation they had a right to the home.
Hildebrand, who said he commonly meets with bankruptcy officials from the big lenders, including Bank of America, said the situation appeared to be a result of miscommunication.
“It may be a manifestation of the right hand not knowing what the left is dong, which is exactly the problem,” he said.
Hildebrand has become well known for his efforts to force mortgage companies to produce the original note when filing a claim in bankruptcy proceedings. (Tennessee is a state that doesn’t require judicial approval for foreclosures, so the process typically takes place in bankruptcy court.)
In a Chapter 13 case, consumers are required to show a myriad of documents, including years of tax returns, and must agree to meet with creditors and debt counselors.
“I don’t see why it’s different if you want to take their house,” Hildebrand said of lenders.
Ultimately, through an amended claim filed on behalf of the debtors, Bank of America will be get $567.18 a month in mortgage payments.
Youtube below is not part of article. Piggybankblog posted.
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It does, however, make them have to prove the loan.
See youtube below!
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