No joke: Bank of America sues itself – Puget Sound Business Journal

Here’s another example of the jumbled mess prevalent in the housing and mortgage market: Bank of America    , Washington state’s largest bank by market share, has sued Bank of America in a foreclosure case. Multiple times.

Online newspaper The Huffington Post reported this item. It points to a dozen cases in Florida where BofA, acting as the owner of one mortgage and the servicer of a second loan on the same property, has sued itself.

An excerpt:

Bank of America is seeking to foreclose on a condominium and names the condo owner and Bank of America as defendants in the suit. The company is literally seeking damages from itself in order to foreclose on the condo owner.

“We are servicing the first mortgage on behalf of an investor and we own the second mortgage,” Bank of America spokeswoman Jumana Bauwens told HuffPost. “Naming the second-lien holder in the suit is necessary to eliminate the junior interest,” Bauwens said.

Some experts say this shows how deep the so-called “robo” foreclosure problems go. Employees are so deep in paperwork that they don’t even notice these issues before sending the cases to court, one expert tells Huffington Post.

But it’s not just BofA. Other banks, including Wells Fargo, are in the same circumstances. And while people chuckle, this isn’t a joke. There are some cases where it’s completely legitimate for the same company to be on both sides of a legal action. For example, BofA, acting as a mortgage servicer on behalf of the investors that own a first mortgage, is legally required to “sue itself” if the bank also holds a second mortgage on the same property.

It’s one of the side effects of being the second-largest bank in the country.

BofA earlier this year lost its distinction as the nation’s largest mortgage servicer. For reasons like this, it probably doesn’t mind.

via No joke: Bank of America sues itself – Puget Sound Business Journal.

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