Frequently Asked Questions

  1. What is this lawsuit about?
  2. What is Form 1098?
  3. How do I know if I am a Class Member?
  4. What does the Settlement for Tax Year 2009 Provide?
  5. Who is eligible for payment under the 2009 part of the Settlement?
  6. How can I receive my payment under this portion of the Settlement?
  7. What does the Settlement for Tax Years 2010, 2011, 2012, and 2013 Provide?
  8. When am I going to receive my Form 1098 showing my interest payments for 2013?
  9. When will I receive my amended Forms 1098 and my $40 payments?
  10. Will BANA report my Payments of Deferred Interest on Form 1098 for future Tax Years?
  11. Why is the Settlement for Tax Years 2010, 2011, 2012, and 2013 different from the Settlement for Tax Year 2009?
  12. Who may exclude themselves from the Settlement?
  13. How do I ask to be excluded from the Settlement Class for Tax Year 2009?
  14. How does opting out of the Settlement Class for Tax Year 2009 affect my status as a Class Member for the Settlement for Tax Years 2010, 2011, 2012, and 2013?
  15. Who may object to the Settlement?
  16. How do I object to the Settlement?
  17. What if I do nothing at all?
  18. When and where is the Fairness Hearing?
  19. Do I have a lawyer in this case?
  20. Who is the Claims Administrator and what does it do?
  21. How will Class Counsel, the Named Plaintiffs, and the Claims Administrator be paid?



1. What is this lawsuit about?

The lawsuit is a class action known as Horn v. Bank of America, N.A., Civil Case No. 3:12 cv-1718-GPC-BLM, pending before Judge Gonzalo P. Curiel of the United States District Court for the Southern District of California.

In the lawsuit, Richard M. Horn and Maria Gurevich (“Plaintiffs”) have asserted, on behalf of themselves and others similarly situated, claims for (1) breach of contract; (2) negligence per se; (3) negligent misrepresentation; (4) intentional misrepresentation; (5) unfair business practices, in violation of California’s Business and Professions Code § 17200-17210; and (6) declaratory judgment.

All of Plaintiffs’ claims are based on BANA not having reported on Form 1098 for Tax Years 2009, 2010, 2011, or 2012 Option ARM borrowers’ Payments of Deferred Interest in those years. Plaintiffs allege that this caused them and other Option ARM borrowers to overpay their taxes, as they did not claim a mortgage interest deduction for their Payments of Deferred Interest in those years.

BANA, however, disputes Plaintiffs’ allegations and contends that IRS regulations do not require the reporting of Payments of Deferred Interest on Form 1098.

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2. What is Form 1098?

Form 1098 is an IRS form, which BANA files with the IRS and sends to you each year reporting the amount of your mortgage interest payments for the year to the extent they total at least $600. You may have used Form 1098 to determine the amount of mortgage interest to claim as a deduction on your income taxes.

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3. How do I know if I am a Class Member?

You have received a Notice if BANA’s records show that you paid deferred interest on your Option ARM in 2009, 2010, 2011, 2012, or 2013. Depending on when you made Payments of Deferred Interest, you may be a member of the Settlement Class for Tax Year 2009; the Settlement Class for Tax Years 2010, 2011, 2012, and 2013; or both. You can participate in the Settlement even if you no longer own the property that had the mortgage. The specific definitions of each class are as follows:

Settlement Class for Tax Year 2009

All persons who made Payments of Deferred Interest on their Option ARMs in Tax Year 2009 and for whom BANA was or would have been required by 26 U.S.C. § 6050H and 26 C.F.R. § 1.6050H-1 to file a 2009 Form 1098.

Settlement Class for Tax Years 2010, 2011, 2012, and 2013

All persons who made Payments of Deferred Interest on their Option ARMs in Tax Years 2010, 2011, 2012, or 2013 and for whom BANA was or would have been required by 26 U.S.C. § 6050H and 26 C.F.R. § 1.6050H-1 to file a Form 1098 for the same Tax Year in which the Payments of Deferred Interest were made.

For both Settlement Classes, “Payments of Deferred Interest” means payments received by BANA in excess of the accrued interest in the month to which the payment relates to the extent that the excess portion of those payments were applied to pay down interest that had previously been added to the outstanding principal amount of the Option ARM pursuant to the terms of the Option ARM. “Tax Year” means the twelve consecutive months beginning January 1 and ending December 31.

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4. What does the Settlement for Tax Year 2009 Provide?

If you made Payments of Deferred Interest in Tax Year 2009 and submit a timely “Claim Form” showing that you qualify, BANA will pay you 75 percent of the estimated tax deduction value of your Payments of Deferred Interest.

The average payment made pursuant to this portion of the Settlement is expected to be about $370 per person, but your payment could be as high as several thousand dollars or as low as a few dollars.

The particular amount due to you will be determined by (1) totaling your payments to BANA of deferred interest in 2009; (2) multiplying that amount by a 20 percent estimated tax rate; and (3) multiplying that product by 75 percent. For example, if you made deferred interest payments of $2,300 during 2009, that amount would be multiplied by 20 percent, which in turn would be multiplied by 75 percent, thereby resulting in a payment to you under this portion of the Settlement of $345.

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5. Who Is eligible for payment under the 2009 part of the Settlement?

The criteria for eligibility is whether:

  1. In 2009, your Bank of America Option ARM mortgage was secured by either your principal residence or your second home.
  2. You did not rent your principal residence or second home, which secured your Bank of America Option ARM, to anyone else during 2009.
  3. You deducted mortgage interest on your 2009 tax return.
  4. You only claimed a deduction on your 2009 tax return for the amount of mortgage interest that Bank of America reported on the Form 1098 it sent to you for that year.
  5. On your 2009 tax return, the mortgages on your primary residence and/or secondary home on which your took interest deductions, including both home acquisition debt and home equity debt, did not total more than $1,100,000.

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6. How can I receive my payment under this portion of the Settlement?

The Deadline to submit your Claim Form was July 13, 2014. If you submitted a Claim Form, depending on your answers to the questions, you may not qualify to receive a payment under this portion of the Settlement.

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7. What does the Settlement for Tax Years 2010, 2011, 2012, and 2013 Provide?

If you made Payments of Deferred Interest in Tax Years 2010, 2011, or 2012, the bank will file with the IRS and you will receive amended Forms 1098 reporting your Payments of Deferred Interest in those years, as appropriate. This will facilitate you amending your Tax Returns for these Tax Years to claim a mortgage interest deduction for your previously unreported Payments of Deferred Interest.

If you made Payments of Deferred Interest in Tax Year 2013, the Settlement provides that the amount BANA will report on Form 1098 for Tax Year 2013 will include your Payments of Deferred Interest for the year.

To help defray tax preparation costs associated with amending your Tax Returns for all of these years except for 2013 (because 2013 Tax Returns have not yet been filed), you will also receive a $40 payment per amended Form 1098 you receive.

You must act diligently to amend your prior years’ Tax Returns to claim a mortgage interest deduction for your Payments of Deferred Interest—particularly in regard to your 2010 income Tax Return. This is because of the three-year statute of limitations for amending prior years’ income Tax Returns. You should consult with your tax advisor as to when you must file amended Tax Returns.

You should also consult with your tax advisor as to whether you have already claimed and received a mortgage interest deduction for your Payments of Deferred Interest in 2010, 2011, or 2012.

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8. When am I going to receive my Form 1098 showing my interest payments for 2013?

While the normal deadline for issuing 1098 forms is January 31, the Bank has applied for an extension with the IRS. This extension allows it to send the 2013 1098 forms no later than February 28, 2014. Therefore, the bank will send you your 2013 Form 1098 no later than that date. Please note that pursuant to the Settlement, you may also be receiving amended Forms 1098 for some or all of tax years 2010, 2011, and 2012 at or near the time you receive your 2013 Form 1098. These amended 1098 Forms may allow you to get additional money back from the IRS by amending your tax returns for those years. As you receive this interest information from the Bank you should consult your tax preparer as soon as you can to protect your rights.

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9. When will I receive my amended Forms 1098 and my $40 payments?

It is anticipated that you will receive your amended Forms 1098 by March 15, 2014.

You will receive your $40 payment per amended Form 1098 you receive within 31 calendar days after the deadline for submitting Claim Forms expires or after the Settlement becomes effective, whichever is later.

Note that an appeal of the Court’s order finally approving the Settlement could delay the Settlement becoming effective. If the Court does not approve the Settlement, you will not receive any payment

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10. Will BANA report my Payments of Deferred Interest on Form 1098 for future Tax Years?

Beginning with Tax Year 2013, BANA will report your Payments of Deferred Interest on your Form 1098 for each year, unless otherwise required by law.

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11. Why is the Settlement for Tax Years 2010, 2011, 2012, and 2013 different from the Settlement for Tax Year 2009?

The Settlement was structured this way because the three-year statute of limitations had expired for amending 2009 income Tax Returns, but has not yet expired for amending the other years income Tax Returns.

Because you no longer may amend your 2009 income Tax Return, the Settlement seeks to compensate you for 75 percent of the approximate tax value of your foregone mortgage interest deduction for 2009. However, because you still have time to amend your 2010, 2011, or 2012 income Tax Returns, the Settlement provides you with amended Forms 1098. That way, you can amend your prior year’s Tax Returns and obtain the full and exact tax deduction value of your previously unreported Payments of Deferred Interest.

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12. Who may exclude themselves from the Settlement?

Members of the Settlement Class for Tax Year 2009 may seek exclusion from the portion of the Settlement pertaining to Tax Year 2009.

Members of the Settlement Class for 2010, 2011, 2012, and 2013 do not have the right under the law to seek exclusion from the portion of the Settlement pertaining to those Tax Years.

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13. How do I ask to be excluded from the Settlement Class for Tax Year 2009?

To exclude yourself (or to “opt out”) from the Settlement Class for 2009, you must mail to the Claims Administrator at Horn Settlement, c/o GCG, P.O. Box 35113, Seattle, Washington 98124-5113, a Notice of Your Intention to Opt Out that includes your name, address, telephone number, and, if available, loan number. Your Notice of Intention to Opt Out need not be in any particular form, but must clearly indicate an intent not to participate in the Settlement Class for Tax Year 2009, such as using the words “opt out” or “exclusion.”

Your Notice must be postmarked or received by the Claims Administrator by February 28, 2014 to be valid.

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14. How does opting out of the Settlement Class for Tax Year 2009 affect my status as a Class Member for the Settlement for Tax Years 2010, 2011, 2012, and 2013?

If you are also a member of the Settlement Class for Tax Years 2010, 2011, 2012, and 2013, your opting out of the Settlement Class for Tax Year 2009 does not affect your status as a Class Member of the Settlement Class for Tax Years 2010, 2011, 2012, and 2013, as members of that class do not have the right under the law to opt out. Accordingly, you will still be entitled to receive the benefits under the portion of the Settlement pertaining to Tax Years 2010, 2011, 2012, and 2013.

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15. Who may object to the Settlement?

Only members of the Settlement Class for Tax Year 2009 may object to the portion of the Settlement pertaining to Tax Year 2009. Likewise, only members of the Settlement Class for Tax Years 2010, 2011, 2012, and 2013 may object to the portion of the Settlement pertaining to those Tax Years. All Class Members may object to any other aspect of the Settlement.

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16. How do I object to the Settlement?

To object to the Settlement, you must file a written objection with the Clerk of Court and mail a copy of the objection to the Clerk of the Court, Class Counsel, and counsel for BANA at the following addresses:

To the Court:
Clerk of the Court
United States District Court for the Southern District of California
United States Courthouse
333 West Broadway, Suite 420
San Diego, California 92101

To Class Counsel:
David J. Vendler, Esq.
Morris, Polich & Purdy LLP
1055 West Seventh Street, Suite 2400
Los Angeles, California 90017

Michael R. Brown, Esq.
Michael R. Brown, APC
18101 Von Karman Avenue, Suite 1900
Irvine, California 92612

Jeffrey D. Poindexter, Esq.
Law Office of Jeffrey D. Poindexter
2534 State Street, Suite 306
San Diego, California 92101

To BANA Counsel:
Peter B. Morrison, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071-3144

Your objection must (a) attach documents establishing, or providing information sufficient to confirm that you are a Class Member; (b) include a statement setting forth your specific objections and the grounds for such objections; (c) identify all documents you desire the Court to consider; (d) include an address where you may receive service of process; and (e) state whether you are represented by counsel, and if so, the name and mailing address of your counsel. Your objection will not be considered valid unless you comply with these requirements.

You or your attorney may appear and talk about your objections at the Fairness Hearing. If you or your counsel plan to appear at the Fairness Hearing, however, you must first file with the Clerk of the Court a Notice of intention to appear and provide a copy of that Notice to Class Counsel and counsel for BANA at the above addresses. You may not be heard to object at the Fairness Hearing unless you comply with this Notice requirement.

Any Class Member who does not provide a timely written objection in the manner prescribed in the Preliminary Approval Order shall be deemed to have waived any objection and shall forever be foreclosed from making any objection to the fairness, reasonableness, or adequacy of the proposed Settlement, the award of attorneys’ fees, or the Named Plaintiffs’ case contribution awards.

Your objection must be filed and served by February 28, 2014 to be considered.

Keep in mind: Although the Court will consider your objections, there is no guarantee that the Court will agree with them or take any actions based on your objections.

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17. What if I do nothing at all?

If you are a member of the Settlement Class for Tax Year 2009 and you do nothing at all, you will not receive a payment under the Settlement for that year. You, however, will be bound by the Settlement.

If you made Payments of Deferred Interest in 2010, 2011, and 2012, and do nothing at all, you will receive amended Forms 1098 reporting your Payments of Deferred Interest in those years and a $40 payment per amended Form 1098 you receive. You will also be bound by the Settlement.

If you made Payments of Deferred Interest in 2013, and do nothing at all, you will receive a Form 1098 for Tax Year 2013 that includes the amounts of your Payments of Deferred Interest in that year. You will be bound by the Settlement.

Without having to do anything, borrowers will receive Forms 1098 that include the amount of deferred interest paid, if any, in future years.

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18. When and where is the Fairness Hearing?

The Fairness Hearing is currently set for April 11, 2014, at 1:30 p.m., in Courtroom 2D of the United States District Court for the Southern District of California, 221 West Broadway, San Diego, California 92101.

Anyone whose rights are affected by this Settlement may attend the Fairness Hearing and ask to speak in favor of or object to the Settlement, or ask questions. You are not obligated to attend the settlement hearing in order to receive the benefits of the settlement. If you plan on objecting to the Settlement, however, you must first follow the procedures for objecting detailed above, or else you cannot speak at the Fairness Hearing.

If you exclude yourself from the Settlement for Tax Year 2009, and you are not a member of the Settlement Class for 2010, 2011, 2012, and 2013 your rights are not affected by the Settlement and therefore you cannot speak at the Fairness Hearing.

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19. Do I have a lawyer in this case?

The Court approved the following lawyers (i.e., Class Counsel) to represent you and all Class Members in this case:

David J. Vendler, Esq.
Morris, Polich & Purdy LLP
1055 West Seventh Street,
Suite 2400
Los Angeles, California 90017
Michael R. Brown, Esq.
Michael R. Brown, APC
18101 Von Karman Avenue,
Suite 1900
Irvine, California 92612
Jeffrey D. Poindexter, Esq.
Law Office of Jeffrey D. Poindexter
2534 State Street,
Suite 306
San Diego, California 92101

You do not need to hire your own lawyer because these lawyers are working on your behalf. If you want to hire your own lawyer, however, you may do so at your own expense. For example, you can hire your own legal counsel to appear in Court for you if you want someone other than these lawyers to speak for you.

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20. Who is the Claims Administrator and what does it do?

The Claims Administrator is GCG, Inc. and may be contacted at Horn Settlement, c/o GCG, P.O. Box 35113, Seattle, Washington 98124-5113, info@HornSettlement.com, or (877) 899-4117. The Claims Administrator handled the mailing of the Notice, will process Claim Forms, and if the Court approves the Settlement, will mail payments provided under the Settlement.

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21. How will Class Counsel, the Named Plaintiffs, and the Claims Administrator be paid?

At the Fairness Hearing, Class Counsel will file a motion for $10.5 million as their combined fee, plus $27,276.44 in costs they have incurred in litigating this Action. Class Counsel’s combined fee was negotiated only after BANA agreed to all the Settlement terms for the classes. The Settlement is not contingent in any way on the Court approving Class Counsel’s request for fees and expenses.

As part of the Settlement, Class Counsel will also file a motion requesting that the Named Plaintiffs who contributed their time and effort helping to litigate the interests of the Class should each receive $25,000 as a “Named Plaintiff Case Contribution Award.” The Named Plaintiff Case Contribution Award is in addition to the payments the Named Plaintiffs may receive under the Settlement and must be approved by the Court. The Settlement is not contingent in any way on the Court approving Class Counsel’s request for the Named Plaintiff Case Contribution Awards.

Class Counsel’s fees and expenses and the Named Plaintiff Case Contribution Awards will be paid by BANA and will not be paid out of the recovery by the Class Members. You will not be responsible for paying these amounts, or any amounts related to this case, personally.

BANA will pay the Claims Administrator’s expenses.

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Important Dates
DateDeadline
July 13, 2014
[Expired]
Claim Form Deadline
(postmarked)
February 28, 2014
[Expired]
Exclusion Deadline
(postmarked)
February 28, 2014
[Expired]
Objection Deadline
(filed and received)
April 11, 2014
at 1:30 p.m.
Fairness Hearing