IMPORTANT UPDATE: A Notice was sent on February 20, 2014, regarding Amended Form(s) 1098 for all years in which you repaid interest that you had previously deferred under your Option ARM loan with Bank of America. You may view the Notice by clicking here.
Introduction To The Case
For information concerning the subject matter of this lawsuit, please review the complaint.
Overview Of The Proposed Settlement
If you had an option adjustable rate mortgage ("Option ARM") with Bank of America, N.A. ("BANA") in 2009, 2010, 2011, 2012, or 2013, you may be affected by a proposed class action settlement. You may want to inform your tax professional since it may affect your Tax Returns for prior years. If you do not use a tax professional, you can still participate in this Settlement and recover the money that will be paid under the Settlement if you are eligible. You can participate in the Settlement even if you no longer own the property that had the mortgage.
The proposed Settlement resolves a class-action lawsuit alleging that BANA under-reported to the IRS on Form 1098 (Mortgage Interest Statement) the amount of mortgage interest paid to BANA during Tax Years 2009, 2010, 2011, or 2012.
Form 1098 is an Internal Revenue Service form that lenders must file with the IRS and provide to borrowers each year. On Form 1098, lenders are generally required to report, among other things, the mortgage interest payments they receive from borrowers in a given year. The IRS uses the form to check the accuracy of the mortgage interest deduction you claim on your income Tax Return.
An Option ARM allows a monthly "minimum payment" that is often less than the interest that was actually owed in a particular month. The portion of the interest that is not paid in those months is called "deferred interest." If, according to BANA's records, you eventually paid all or a portion of that "deferred interest" in 2009, 2010, 2011, 2012, or 2013, you are a member of the Settlement Class. You may have done so, for example, when you sold or refinanced your house, or when you made a payment in a given month on your Option ARM that was in excess of the interest owed for that month.
For Tax Years 2009 through 2012, BANA did not report Payments of "Deferred Interest" on Form 1098-which BANA files with the IRS and sends to you each year reporting the amount of your mortgage interest payments for the year. Accordingly, if you relied on your Form 1098 to determine the amount of mortgage interest to claim as a deduction on your income Tax Returns, you may have overpaid your taxes.
What Are the Benefits of this Settlement?
The Settlement is structured based on Tax Years:
- If you made Payments of Deferred Interest in Tax Year 2009, the Settlement provides you with 75 percent of the approximate tax deduction value of your Payments of Deferred Interest during the year. Monetary compensation is provided because the time period for filing amended income Tax Returns for 2009 has expired. TO RECEIVE THIS PAYMENT, YOU MUST SUBMIT A TIMELY CLAIM FORM SHOWING THAT YOU QUALIFY FOR THE PAYMENT.
- If you made Payments of Deferred Interest in Tax Years 2010, 2011, or 2012, the Settlement provides you with amended Forms 1098 reporting your Payments of Deferred Interest in those years. In addition, for each amended Form 1098 you receive, you will receive $40 to help defray tax preparation costs associated with amending your Tax Returns to claim deductions for the previously unreported Payments of Deferred Interest. You do not need to do anything to receive these benefits under the Settlement.
- If you made Payments of Deferred Interest in Tax Year 2013, the Settlement provides that BANA will report on Form 1098 for Tax Year 2013 your Payments of Deferred Interest for the year.
The Court overseeing this case still has to decide whether to approve the Settlement and will make that determination after a "Fairness Hearing." Payments will only be made if the Court approves the Settlement and after appeals, if any, are resolved.
Your legal rights will be affected by this Action and this Settlement whether you act or do not act. Your legal rights and options-and the deadlines to exercise them-are explained in the Notice and on this Website. Please read the Notice and review this Website carefully.