Is Bank of America Developing A Pattern of Wrongful Evictions?

Good Morning Folks,

I was surfing through Yahoo this morning when this video jumped out at me. Evidently, Bank of America has been developing a nasty habit of foreclosing on people accidentally. For example, a few weeks ago in Florida, the bank accidentally seized the home of Charlie and Maria Cardozo. BofA went into the Cardozo’s home, took the furniture, changed the locks and kicked the couples tenant out. The kicker is, the couple owned the home outright – they didn’t have a mortgage with BofA. The whole thing was due to a mix up on the legal paperwork.

The only thing is, BofA’s actions against the Cardozos is not an isolated incident. Other bloggers have noted what appears to be a troubling pattern of behavior by BofA. The major culprit seems to be the fact that the bank is large and bureaucratic so its internal communications don’t appear to be working well. Consumer affairs has the story here and American Consumer News has covered it also. Finally, the timesnews.net has covered BofA’s efforts to reduce the amount of damages they are required to pay in another wrongful eviction lawsuit. So this has happening periodically over the past couple of years.

Now, while its sometimes premature to draw patterns from a couple of news stories. The only explanation that would make sense to explain BofA’s behavior is incompetence. In this day and age, with adequate regulatory controls, it seems far fetched that a bank would make a formal policy of wrongful eviction. Instead, the source of the problem is likely what these new stories have alluded to – which is that the banks foreclosure processes is flawed.

Now, as a final thought I’ll just say this: for investors this is a red flag. To the extent that the problems with the foreclosure processes are reflected in other aspects of the bank’s internal management, a pattern of improper foreclosures will, in some form or another, ultimately be reflected in BofA’s financial bottom line.

Best,

James