Sunday, April 19, 2015

As It Moved To Seize Home, Bank Never Told Widow Her Loan Was Insured

WASHINGTON — For more than a decade after her husband died, Laura Coleman Biggs paid her mortgage to a Bank of America subsidiary. She was never told, even as she was weeks from losing her home, that her husband had actually protected her against foreclosure.

George "Kenny" Mitchell had taken out a special lender-pushed insurance policy to pay off most of his loan if he died.

But when he passed away on April 26, 2003, the subsidiary of Bank of America did not arrange a payoff of the $100,000 policy and continued to charge his widow an insurance premium every month along with her mortgage payment.

Now Bank of America, Select Portfolio Servicing — a company that collects mortgage payments — and a Florida insurer all face a federal lawsuit in California seeking compensatory and punitive damages, alleging negligence and fraud for their treatment of Biggs.

Her lawyers hope it will pull others out of the shadows nationwide who've faced similar problems with the nation's big banks, already forced to pay regulators billions over the housing bust. The plight of the former nurse speaks to how much dysfunction remains in the housing finance system, which nearly toppled the U.S. economy seven years ago.  READ MORE

No comments: