A formal investigation has been set in motion by General Eric Schneiderman, the state of New York’s Attorney General, into the practice of mortgage securitization by Bank of America and many other mortgage institutions with in the state.
Directly in question is the way in which BofA verified income of the homeowners in which the bank foreclosed on. Discovered evidence has lead investigators to believe that many homes foreclosed upon by the bank that were then bundled and sold to investors were done so on faulty verification of income. If this is the case the bank had no legal ground to reclaim the properties, thus had no right to resell those same properties.
If the grounds for investigation prove to be founded Bank of America will stand to lose billions. One analyst predicts as much as $27 billion.
Dan P. Frahm, a Bank of America spokesperson, told CBS’ money watch.com that he feels as though “the bank has complied with all laws.”