In Fine Print, Banks Require Struggling Homeowners to Waive Rights

A few months ago, Bank of America offered Sergio Cortez of Staten Island, N.Y., the help he desperately needed to stay in his home: a break on his mortgage. Like millions of others, he was facing foreclosure. But there was a catch buried in the fine print. Cortez had to waive any possibility of ever suing the bank for anything relating to the loan.


Cortez isn't alone. While regulators have banned the practice, some banks and others who handle mortgages have still been forcing homeowners into a corner: You want a chance at saving your home? Then you'll have to waive your rights.

"It's just unfair," said Jane Azia, director of consumer protection for the New York State Banking Department. "It puts borrowers in a very vulnerable situation."

We identified eight banks and other mortgage servicers who offer help that limits homeowners' ability to sue or fight foreclosure. When we contacted them, they offered a variety of responses. Some said the inclusion of the waivers had been a mistake and would stop. Some argued that language that seemed to waive the homeowner's rights didn't actually do so. One argued that a loophole in a rule barring the practice meant their inclusion in certain agreements was proper.

Read on.


Bank of America, the country's largest servicer, included similar language in agreements late last year not only in New York, but several other states.


It's not a new practice for Bank of America. Back in July 2008, Rep. Waters confronted Bank of America executive Michael Gross over the practice during a congressional hearing. When Gross said he wasn't aware that the bank had ever required that borrowers waive their rights, Rep. Waters read out an excerpt from a Countrywide agreement. Bank of America had bought Countrywide that year.

After hearing the excerpt, Gross apologized and promised the issue would "be under review by Bank of America very quickly."

But ProPublica spoke to attorneys in New York, Maine, Connecticut, Indiana and North Carolina who received agreements with waiver clauses from Bank of America in the last year. In four cases, the clause was word-for-word the same as the one discussed in the 2008 hearing, a lengthy paragraph involving a release of all of Bank of America's "investors, employees and related companies from any and all claims." [13]

Bank of America's language even waives the right to invoke a California law that limits the scope of waiver clauses, "so that this release shall include all and any claims whatsoever of every nature concerning the loan."

Click here to view Bank of America forebearance agreement which include waiver agreement.


Brown argued the language in the clause "is not a waiver" because it did not expressly waive the borrower's rights.


Banks are being unfair to homeowners without legal representation.