This decision is brilliant. If this actually is paid (which is some time off) then the large award to the homeowners who will gift most of it to the law schools in California will have penetrated academia and therefore the education of law students who will learn, for the first time, what is wrong with virtually all the foreclosures in the United States.
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A federal bankruptcy judge awarded $45 million in punitive damages for wrongful foreclosure to a Sacramento couple on March 23rd — much of which will go to University of California law schools.
The judge ruled the couple will give each of the five campuses — UC Berkeley School of Law, UC Davis School of Law, UC Hastings College of Law, UCLA School of Law and UC Irvine School of Law — $4 million of the punitive damages. The couple will receive a little over $1 million in actual damages despite suffering years of abuse by their loan servicer Bank of America.
Additionally, the judge ruled that $10 million of the punitive damages to both the National Consumer Bankruptcy Rights Center and the National Consumer Law Center. No comment if the couple believes a punishment of $1 million dollars compensates them for the trauma, health issues and life altering experience Bank of America subjected them to.
According to court documents, the couple filed a chapter 7 bankruptcy case to clear debt, thus enhancing their ability to pay Bank of America on a modified loan. After a discharge of the chapter 7 case, the couple received no benefit to their credit profile. The couple faced with “imminent foreclosure,” caused them to file a subsequent Chapter 13 case in order to move forward with loan modification. The combination of a Chapter 7 bankruptcy discharge followed by a Chapter 13 filing is sometimes referred to as a “Chapter 21”. This sequence allows a debtor to discharge unsecured debt in the Chapter 7 and then file a Chapter 13 to deal with secured debt.
Bank of America expressed their understanding that their performance in this foreclosure was not satisfactory and that they have since changed their processes in a public statement. Where have we heard that before? At this time criminal charges should apply.
“We believe some of the court’s rulings are unprecedented and unsupported, and we plan to appeal,” the statement from Bank of America said. This case showcases the fraud and incompetence that occurs by loan servicers who are attempting to engineer a foreclosure through intimidation and other illegal tactics. Bank of America participates in this type of unconscionable fraud on a daily basis. Despite a $45 million dollar fine, when you are making billions of dollars by illegally foreclosing, this is hardly a dent in the bucket.