Bank of America Drops Case Against TN trustee; Agrees to Pay Attorney Fees

Charlotte, N.C.-based Bank of America (NYSE: BAC) has dropped its legal attack on Nashville’s Chapter 13 bankruptcy trustee.

Earlier this year, as part of a consumer bankruptcy proceeding, Bank of America became the first lender to sue a Tennessee trustee of the court.

In an agreement filed Thursday, Bank of America worked out a deal directly with the debtors — dropping accusations that Chapter 13 trustee Henry “Hank” Hildebrand wasn’t dispersing money appropriately.

“They decided they would dismiss the lawsuit, pay my attorney fess and they apologized,” Hildebrand said.

In essence, Bank of America argued that it shouldn’t have to file a claim in the bankruptcy proceedings. That argument is tangential to efforts seeking an end to a common defense tactic used by debtors and foreclosure judges in the aftermath of the mortgage meltdown. Known as “show me the note,” the tactic forces a lender to offer up physical documentation that they actually own the mortgage.

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