CHARLOTTE, N.C. (Legal Newsline)-As four U.S. senators joined the chorus of political leaders and activists calling for a foreclosure moratorium, Bank of America continued to resist requests that it voluntarily adopt such measures on Countrywide Financial Corp. loans.
"We understand the concerns that have been raised," Bank of America spokeswoman Shirley Norton told Legal Newsline on Tuesday, "and believe there are better alternatives for our customers and communities than broad moratoriums."
Bank of America is the parent company of Countrywide, a mortgage company engaged in several lawsuits over its alleged predatory lending practices.
Pressure for a temporary foreclosure freeze gained momentum in recent weeks following the Federal Deposit Insurance Corp.'s decision to enact a temporary moratorium on all IndyMac loans.
The federal government took over Pasadena, Calif.-based IndyMac when it failed, and has also recently taken control of Fannie Mae and Freddie Mac. FDIC Chair Sheila Baer has touted its plan as a model for restructuring loans to help homeowners avoid foreclosure.
On Friday, Sens. Charles Schumer, Robert Menendez, Sherrod Brown and Bob Casey sent a letter seeking a temporary foreclosure freeze for Fannie Mae and Freddie Mac. The moratoriums, the letter stated, would allow "time to modify loans and make them affordable for struggling homeowners."
Greenlining Institute's General Counsel Robert Gnaizda said he talked with Bank of America officials about the need for more urgent action, following a letter requesting a freeze that he sent to California Attorney General Jerry Brown and Bank of America Chairman and Chief Executive Officer Ken Lewis.
"Bank of America seems only interested in a settlement that allows it to continue business as usual," Gnaizda told Legal Newsline last week.
Norton said Bank of America is working on many fronts to help homeowners.
"We are working aggressively to avoid foreclosures," Norton said, "and are committed to helping our customers avoid foreclosure whenever they want to remain in the property and have the ability to pay."
Norton said the company is awaiting progress on a new program under the Federal Housing Administration, under the Hope for Homeowners Act of 2008. The act, recently signed by President Bush, will offer refinancing for abusive loans.
"Once regulations are issued," Norton said, "we can determine which borrowers may qualify for the 'Hope for Homeowners' program, and will consider suspending foreclosure proceedings for these borrowers."
Bank of America officials, Norton said, will testify on Wednesday at the House Financial Services Committee hearing.
Meanwhile, Bank of America continues to navigate a sea of legal problems it inherited when the lending institution purchased Countrywide earlier this year.
Bank of America officials remain in negotiations with attorneys general from several states that have sued Countrywide.
In August, Brown, the first to sue Countrywide, disclosed "shocking new details" about Countrywide's predatory lending practices that rewarded employees for selling riskier and more expensive loans.
Illinois Attorney General Lisa Madigan filed a suit the same day as Brown. West Virginia, Connecticut, Florida and Indiana have since filed suits of their own, as has San Diego City Attorney Mike Aguirre.
Brown told Legal Newsline last week negations with Bank of America are ongoing.
"This is a very complex situation," he said.
"We continue to cooperate with the California Attorney General," Norton said, "and share a common objective to assist borrowers struggling to meet their mortgage obligations."
A Multi-District Litigation Panel will convene at Harvard University on Sept. 25 to decide where these cases will ultimately be heard. Bank of America has requested all cases be put together in federal court, a move the state attorneys general oppose.
Gnaizda said he and other organizations are no longer expecting support from Brown for a foreclosure freeze.
"It appears that the driving force ... will not come from the California Attorney General," Gnaizda said. "It is more likely to be a combination of the San Diego City Attorney and the Connecticut and Illinois Attorney Generals."
On Sept. 9, Aguirre asked the San Diego City Council to issue a resolution declaring a foreclosure crisis and advocating a freeze, a request they declined to take action on.
The Illinois Attorney General's Office expressed interest in pursuing a preliminary injunction that would institute a foreclosure moratorium, but that was put on hold pending the jurisdiction hearing on Sept. 25.