Banking

Groups urge foreclosure halt

California community groups on Wednesday urged the state's attorney general to bar Bank of America Corp. from foreclosing on any fraudulent mortgages made by Countrywide Financial Corp., which was acquired by the Charlotte bank July 1.

California Attorney General Jerry Brown filed a lawsuit this summer against Countrywide alleging deceptive lending practices. Now the California Reinvestment Coalition and the Greenlining Institute want Brown to seek a preliminary injunction creating a foreclosure moratorium involving these loans.

The groups said 900,000 Californians face foreclosure in the next two-and-half years. They said about 200,000 of those foreclosures could result from loans made by Countrywide.

The groups' plea comes a day after U.S. Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and other lawmakers called on Bank of America and other lenders to halt foreclosures involving loans that could be eligible for a new Federal Housing Administration mortgage rescue program. That initiative begins Oct. 1.

Bank of America spokesman Dan Frahm said the company has previously committed to keeping an estimated 265,000 customers in their homes by modifying at least $40 billion in troubled mortgages. He said the bank is still identifying customers that might be helped by the legislation and isn't prepared to make a “sweeping statement” regarding one segment of borrowers. “We understand the urgency to assist struggling homeowners and have been aggressively working with our customers on a case-by-case basis to explore all options,” he said.

The California attorney general's office did not return a call seeking comment.

Also on Wednesday, Connecticut sued Countrywide, becoming the latest state to take the mortgage lender to court over its lending practices. State Attorney General Richard Blumenthal alleges that Countrywide misled borrowers into taking on risky home loans they could not afford.

Bank of America said in a statement Wednesday that it cannot comment on pending litigation. “Since taking ownership of Countrywide in July, Bank of America has been involved in a detailed review of Countrywide's operations,” the statement said. “Practices that established Bank of America's positive reputation and record in home lending are an illustration of how we will operate the combined company.” The Associated Press contributed.

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