A law firm engaged in the practice of helping distressed homeowners negotiate loan modifications has filed a lawsuit alleging that Bank of America and its subsidiary Countrywide Home Loans deliberately and maliciously sought to harm its reputation with its clients in order to stall and mislead clients.

According to United Law Group, representatives from Bank of America are telling the law firm’s clients that United has not contacted them and that they have not received any notices and legal demands on their behalf. In response to those claims, United Law Group — a provider of legal foreclosure prevention and foreclosure litigation service — today announced that it filed a complaint in the Superior Court of the State of California County of Orange Central Justice Center against Bank of America and its subsidiary Countrywide Home Loans, Inc. for tortuous interference with contract, defamation (slander) and unfair business practices.

The complaint alleges that as a direct result of the representations, statements and recommendations made by Bank of America and Countrywide Home Loans directly to United Law Group’s clients, United Law Group’s clients became distraught and confused as to the state of their loan modification applications, the services being performed by United for those clients, and whether such loan modifications were even possible in the first place. In short, United is claiming that Bank of America representatives were aware that their direct communications with United Law Group’s clients would cause a significant crisis in confidence, and intended those consequences when the communications were made.

“Representatives from Bank of America are telling our clients that we have not contacted them and that they have not received our notices and legal demands,” says Richard Stinstrom, Senior Litigator for United Law Group. “This deliberate attempt to mislead our clients is a calculated move designed to shake consumer confidence so that these consumers cancel with United Law Group.”

United is asking the court to help recover actual damages, general damages and punitive damages. The firm is also seeking a preliminary restraining order and preliminary and permanent injunction against Bank of America and its subsidiary Countrywide Home Loans from engaging in any communications directly with the firm’s clients, other than as may be specifically permitted by United Law Group, following receipt of notice of representation by United Law Group.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

The State of Virginia has joined a nationwide settlement agreement with Countrywide that spells good news for the state’s distressed homeowners. In total, the settlement will provide more than $8 billion in loan modifications and foreclosure relief to as many as 397,000 homeowners across the United States, including projected relief of $210 million for nearly 9,000 homeowners in Virginia. (Countrywide was acquired by Bank of America Corporation in July 2008.)

Under terms of the settlement, Countrywide and its affiliates have agreed to offer loan modifications for eligible borrowers, allowing hundreds of thousands of Americans to keep their homes. According to the settlement agreement, borrowers eligible for loan modifications are those who received either a qualifying sub-prime adjustable rate mortgage or a Pay Option adjustable rate mortgage prior to Dec. 31, 2007, and who meet other specific requirements.

Depending on the type of loan, Countrywide’s loan modifications may include an automatic freeze or reduction in interest rates, conversion to fixed-rate loans, or refinancing or reduction of the principal owed. Under the company’s proposed loan modifications, first-year payments of principal, interest, taxes and insurance will be targeted to equal 34 percent of the borrower’s income.

In addition, as part of the settlement, Countrywide has agreed to pay a total of $150 million nationwide under a Foreclosure Relief Payment program for particular borrowers who either already have lost their homes or are at least 120 days delinquent. Virginia’s share of this amount is approximately $2.5 million. Countrywide will also pay up to $70 million nationwide for relocation assistance to borrowers who do not qualify for a loan modification and who subsequently face foreclosure. Virginia’s projected portion of these payments is estimated at $2.3 million.

On December 1, 2008, Countrywide began sending mailings to eligible Countrywide borrowers notifying them of the loan modifications that may be available under the terms of the settlement. Countrywide customers who have questions about their eligibility for a loan modification are encouraged to call Countrywide toll-free at 1-800-669-6607.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)