Attorneys general in Arizona and Nevada filed civil lawsuits Friday against Bank of America Corp., alleging that the lender is misleading and deceiving homeowners who have tried to modify mortgages in two of the nation's most foreclosure-damaged states.

Bank of America violated Arizona's consumer fraud law by misleading consumers who tried to reduce their monthly payments to keep their homes, state Attorney General Terry Goddard said. The bank also violated the terms of a 2009 consent agreement requiring its Countrywide mortgage subsidiary to implement a loan modification program, the Arizona lawsuit alleges.

Hundreds of homeowners kept making their mortgage payments because Bank of America repeatedly assured them that their loans were being modified, Goddard said. Instead, many lost their homes anyway.

"Those people could have used that money for something else," Goddard told The Associated Press. "They were deceived into continuing to make mortgage payments when they had no hope of saving their homes."

Nevada Attorney General Catherine Cortez Masto told the AP that the Silver State's lawsuit was a last resort to try to get the bank to change its ways. It was filed after several discussions with bank managers led to assurances but little more.

"Clearly there is a disconnect between what Bank of America tells me at the management level and what's happening on the front line," Masto said.

Masto said separate lawsuits show the bank's problems with consumers are widespread.

"The only thing that I'm asking is that (Bank of America) give them a reasonable response in a timely manner," she said. "It is, in my perspective, a callous disregard for what we are telling them."

Nevada and Arizona are among the states hardest hit by homeowners who have defaulted on mortgages in the last few years as adjustable payments soared, people lost their jobs, and home values collapsed. One out of every 99 households in Nevada received a foreclosure notice last month, according to RealtyTrac Inc., and Arizona's rate wasn't far behind.

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The Arizona attorney general's office was deluged with consumer complaints and launched an investigation more than a year ago, Goddard said. Settlement talks with Bank of America began in April but ultimately collapsed Thursday.

Goddard, a Democrat, is leaving office in January after an unsuccessful run for governor and will be replaced by Republican Tom Horne. A Bank of America spokesman criticized Goddard for filing the lawsuit in his last days in office while multistate negotiations on foreclosures were under way.

Dan Frahm, a senior vice president for the Charlotte, N.C.-based bank, said it shares the attorneys general's goal of helping homeowners. "We are disappointed that the suits were filed at this time, however, because we and other major servicers are currently engaged in multistate discussions led by Attorney General (Tom) Miller in Iowa to try to address foreclosure related issues more comprehensively," Frahm said in an e-mailed statement.

"Bank of America has been a cooperative partner with the attorneys general, has worked with state leaders to evolve programs and resources to broaden assistance to distressed customers, and we are already under way with further improvements to our processes and programs for Bank of America customers," Frahm said.

Bank of America has completed nearly 750,000 loan modifications and has foreclosed on fewer than half that many homes, Frahm said. Many of the foreclosures did not qualify for loan modifications.

The Arizona lawsuit, filed in Maricopa County Superior Court, alleges that the bank has repeatedly violated an October 2008 consent agreement between Bank of America and 11 states requiring the bank's Countrywide subsidiary to modify hundreds of thousands of loans. Arizona's agreement was finalized in 2009.

Countrywide was accused of engaging in widespread deceptive practices with its customers, and Bank of America agreed to reduce principal or interest payments by up to $8.4 billion on those loans.

But Bank of America, which had acquired Countrywide in July 2008, failed to make timely decisions on modification requests and went ahead with foreclosures, Goddard said.

Bank of America is the No. 1 loan servicer in both Arizona and Nevada. It's also tops in complaints to Arizona regulators, and not just because of its size, Goddard said.

"They're head and shoulders above any other financial institution," he said. "Nobody's got a great record, but Bank of America's is worse than any of them.

Friday's lawsuit in Arizona asks for contempt citations against the bank for violating the consent agreement. It also seeks restitution for consumers, civil penalties, legal fees, plus $25,000 for each consent agreement violation and up to $10,000 for each violation of the Arizona Consumer Fraud Act.

Nevada's complaint accuses the bank of operating its loan modification program in violation of the Nevada Deceptive Trade Practices Act. It seeks civil penalties and restitution along with other fees.

Bank of America shares rose 5 cents to $12.57 Friday.

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Associated Press writer Oskar Garcia in Las Vegas contributed to this report.

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