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With taxes on everyone’s mind, some 90,000 Bank of America mortgage holders will receive a pleasant surprise soon thanks to a class action settlement approved Friday that will provide $223 million in tax deductions to eligible property owners.
The class action settlement stems from allegations that Bank of America failed to report to the Internal Revenue Service over $1.5 billion in mortgage interest that had actually been paid by Class Members.
Since homeowners can deduct the interest on their monthly mortgage payments, normally a taxpayer could reduce their taxable income by hundreds, if not thousands of dollars. However, lead plaintiff Richard Horn said that Bank of America had improperly calculated the interest when it sent out IRS Form 1098 documents to homeowners.
In all, the new documents that will be sent out as part of the Bank of America class action lawsuit settlement could result in tax deductions of $223 million or more. Further, while there is no injunction in the class action settlement, Bank of America’s defense team did include a promise in the agreement that the company would update its practices and therefore “report payments of deferred interest going forward.” The company had initially argued that home mortgage holders would be able to deduct interest regardless of its reporting.
The initial Bank of America class action settlement was reached in December after months of negotiations between the company and the plaintiffs’ class action lawsuit lawyers, but was only approved by U.S. District Court Judge Gonzalo P. Curiel on April 11, 2014.
Based on the estimated 90,000 Class Members, the $223 million in tax deductions would decrease the average home mortgage holder’s taxable income by an average of $5,500, independent of the other factors that influence how one’s tax return is filled out beyond the IRS Form 1098 documents.
Horn and the rest of the class are represented by David James Vendler of Morris Polich & Purdy LLP and by Michael R. Brown and Jeffrey D. Poindexter.
The Bank of America Home Mortgage Interest Class Action Lawsuit is Richard Horn v. Bank of America NA, Case No. 12-cv-01718, U.S. District Court, Southern District of California.
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One thought on Bank of America Mortgage Interest Class Action Settlement Approved
I had b of a mortgage in 2014.not sure if eligible. Add me if I am.