## Facts

- The United States and all 50 states (collectively, the United States) sued Bank of America Corporation and affiliated entities involved in mortgage servicing (collectively, BoA), along with other financial institutions.
- The United States alleged that BoA’s mortgage-servicing practices violated federal and state law, including the federal False Claims Act, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), the Servicemembers Civil Relief Act (SCRA), the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and state unfair-and-deceptive-acts-and-practices (UDAP) laws.
- Rather than litigate the claims to judgment, the United States and BoA agreed to resolve the allegations through a negotiated consent judgment presented to the court.
- The consent judgment required BoA to implement specified mortgage-servicing standards on a forward-looking basis.
- The consent judgment required BoA to pay more than $2.3 billion into a fund to be distributed in the manner and for the purposes set forth in the consent judgment.
- The consent judgment also required an escrow agent (to be appointed under the judgment) to transfer approximately $1.5 billion from an escrow account to the settlement administrator for distribution to certain mortgage borrowers whose homes were finally sold or taken by foreclosure between January 1, 2008, and December 31, 2011.
- In addition, the consent judgment required BoA to provide more than $7.6 billion in relief to eligible consumers and to pay approximately $950 million in refinancing relief to eligible consumers.

## Issues

1. Whether the court should enter the parties’ proposed consent judgment resolving the United States’ federal and state mortgage-servicing claims against BoA and imposing the specified servicing standards and monetary and consumer-relief obligations.

## Decision

- The court ordered, adjudged, and decreed entry of the consent judgment agreed to by the United States and BoA.
- The consent judgment imposed specified mortgage-servicing standards on BoA.
- The consent judgment required BoA to pay more than $2.3 billion into a fund to be distributed as set out in the judgment.
- The consent judgment required the escrow agent to transfer approximately $1.5 billion to the settlement administrator for distribution to certain borrowers whose homes were finally sold or taken by foreclosure between January 1, 2008, and December 31, 2011.
- The consent judgment required BoA to provide more than $7.6 billion in relief to eligible consumers and to pay approximately $950 million in refinancing relief to eligible consumers.

## Legal Principles

- A federal court may enter an enforceable consent judgment that resolves asserted claims and imposes injunctive and monetary relief when the parties consent to the decree and the court enters it as an order of the court.
- A consent judgment may impose detailed operational requirements (such as mortgage-servicing standards) and payment obligations as settlement remedies, even though the court does not decide the merits of the underlying allegations.
- A consent judgment may create mechanisms for administering monetary relief—such as appointing an escrow agent and a settlement administrator and directing transfers and distributions pursuant to defined eligibility criteria and time periods.

## Conclusion

In United States v. Bank of America Corp., the court entered a negotiated consent judgment resolving federal and state claims alleging unlawful mortgage-servicing practices by BoA, requiring compliance with specified servicing standards and ordering multibillion-dollar payments and consumer relief, including a distribution program for certain borrowers foreclosed between 2008 and 2011 and substantial additional consumer and refinancing relief.


United States v. Bank of America Corp., 2012 U.S. Dist. LEXIS 188892 (2012)