Bank of America must pay $46 million for improperly foreclosing on a California couple’s home in 2010. 

U.S. Bankruptcy Court Judge Christopher Klein levied [PDF] the judgement against the bank this week, calling Bank of America’s actions in foreclosing on the couple’s home “heartless” and “brazen.”

In all, Klein ordered the bank to pay $46 million, most of which will be divvied up by law schools and consumer advocate agencies, with the couple receiving about $1 million.

Klein noted in the 107-page ruling that the fine should be enough to spur change with the bank’s mortgage practices, and not be seen as “petty cash or chump change.”

“It is apparent that the engine of Bank of America’s problem in this case is one of corporate culture… not rogue employees betraying an upstanding employer,” Klein added.

The California couple’s problems began in 2008 when they bought a less expensive house in Sacramento than they currently owned.

The couple’s mortgage — $590,000 — was borrowed from a bank that was eventually taken over by Bank of America.

Loan officials had promised the couple they would be able to request lower monthly payments. However, in 2009, Bank of America officials told the couple they could only receive a loan modification if they had missed payments.

“Their sole reason for defaulting, which they did with considerable reluctance was acquiesce in Bank of America’s demand that they default as a precondition for loan modification,” the option states.

After that, “Bank of America started a multi-year ‘dual-tracking’ game of cat-and-mouse,” the ruling states. “With one paw, Bank of America batted the debtors between about 20 loan modification requests or supplements that routinely were either ‘lost’ or declared insufficient, or incomplete.”

By 2010, the couple had filed for bankruptcy, a process that halts foreclosure sales. However, Bank of America improperly took possession of the home, giving the couple a three-day notice.

While the bank later reversed the decision and the couple moved back in, when the couple re-entered the premises, they discovered that major appliances, window coverings, and carpet had been removed.

Additionally, the homeowner’s association had fined the pair $20,000 for dead shrubbery and landscaping.

While the couple was acting in good faith throughout the ordeal — despite medical issues and other expense — Klein found that Bank of America had no intention of acting in good faith.

In a statement to the Wall Street Journal, a rep for Bank of America said the findings were “unprecedented and unsupported,” adding the foreclosure processes have changed since 2010.

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