Judge ruling- Bank of America Corp (NYSE:BAC) must face bribery claims - RDN

Northern, WI 04/13/2013 (avauncer) - A judge has ruled that United States’ second-largest lender by assets, Bank of America Corp (NYSE:BAC) (Closed: $12.17, Down by 0.81%) will have to face homeowner claims that it has accepted bribes from private insurers. The Philadelphia U.S District Judge Berle Schiller turned down the request by the bank, to scrap the lawsuit as the limitations statute had expired on the claims. In a ruling, Schiller said that the homeowners who have sued should be able to develop their argument. The claim should be permitted as there had been an intentional concealment of behavior by the bank.

The claim…

The fact that the plaintiffs have alleged that the defendants made an illegal scheme appear a legal one was reason enough to deny the defendants a dismissal motion said Schiller. The Charlotte, North Carolina-based bank had been sued by three homeowners last year. Their claim had been that between 2004 and 2011, the bank’s pay-to-pay reinsurance scheme had cost its borrowers $284.7 million. Allegedly, that was the amount that had been collected by BoFA from private mortgage insurers. According to the complaint, this was its share of the insurance premiums for having referred borrowers.

Delayed claim

These loans had been obtained from the bank by the homeowners in 2005 and 2007. Private insurers such as a unit of  Radian Group Inc (NYSE:RDN) (Closed: $11.16, Down by 1.41%), Radian Guaranty Inc, Genworth Financial Inc’s, Genworth Mortgage Insurance Corp as well as United Guaranty Residential Insurance Co, a subsidiary of New York-based American International Group Inc, United Guaranty Residential Insurance Co, had been named in the complaint. The plaintiffs seek to represent all the borrowers who had obtained residential mortgage loans since Jan1 2004, from the Bank of America.

Baseless allegations

A Bank of America spokesperson, Shirley Norton said that the ruling is a procedural one and is not based on the merits of this case. The allegations are baseless and the bank will continue to vigorously defend against all the allegations. Schiller ruled against dismissal of the case, by the insurers but also said that the argument that the claims had not been put forth in a timely manner was a legitimate one. He said that the homeowners had not exercised diligence in the discovery of those claims.