Arizona sues Bank of America for mortgage fraud

The legal action was triggered after hundreds of complaints and a year-long investigation centered on the bank's loan modification and foreclosure practices, said the US state's attorney general Terry Goddard.

"Bank of America has been the slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis," he said, announcing the lawsuit filed in the Maricopa County Superior Court.

"It has shown callous disregard for the devastating effects its servicing practices have had on individual borrowers and on the economy as a whole," he added.

Specifically he accused Bank of America, as the biggest US residential mortgage loan servicer, of breaching state consumer fraud law as well as a March 2009 agreement made between Arizona and BoA-owned lender, Countrywide.

In the agreement, called a "consent judgment," Countrywide agreed to develop and implement a loan modification program for some of its former borrowers in the southwestern US state.

Friday's lawsuit alleges that "Bank of America has repeatedly violated the judgment's provisions related to loan modifications," and seeks to order it to pay compensation, fines, lawyers' fees and investigation costs.

"I am filing this lawsuit today because, after years of delay and broken promises, Arizonans should not have to wait any longer to seek redress," said Goddard.

"Our homeowners and communities need and deserve relief. Bank of America must be held accountable for its deceptive conduct and failed commitments," he added.

Bank of America spokesman Dan Frahm lamented the lawsuit, which he said could complicate efforts to reach an agreement with a number of US states including Arizona.

"We are disappointed that the suit was filed... particularly because we and other major servicers are currently engaged in discussions to try to address foreclosure-related issues more comprehensively."

"Bank of America will continue to work towards fair and equitable foreclosure related practices... with the goal of getting Arizonians assistance without the cost, delay and uncertainty of this litigation," he added.