Arizona attorney general Terry Goddard is suing Bank of America Corp. (BAC) and its affiliated companies, alleging the company violated the Arizona Consumer Fraud Act as well as a consent judgment entered in March 2009 between Arizona and the Countrywide companies now owned by BofA. "Bank of America has been the slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis," Goddard said in a statement. "It has shown callous disregard for the devastating effects its servicing practices have had on individual borrowers and on the economy as a whole." Arizona said an investigation into Bank of America's residential mortgage servicing practices began a year ago when the state received "hundreds" of consumer complaints. Arizona has the second highest level of fraud nationwide, according to Interthinx. It is second only to Nevada. The complaint, filed with the Maricopa County Superior Court Friday, alleges that Bank of America mislead borrowers about its loss mitigation process and programs. Issues raised in the complaint include whether homeowners must be delinquent on their mortgage payments to be considered for a modification and whether or not a homeowner had been approved for a loan modification. The consent judgment cited in the complaint was entered on March 13, 2009, according to the Arizona attorney general. It was formed "to resolve the attorney general’s allegations that Countrywide had engaged in widespread consumer fraud in originating and marketing mortgage loans." According to Arizona's statement, Countrywide agreed to develop and implement a loan modification program for certain borrowers. As of Bank of America's takeover of Countrywide in 2008, the firm is responsible for fulfilling that consent judgment. The lawsuit asks the court to hold the defendants in contempt and to pay up to $25,000 for each violation of the consent judgment. The complaint asks for up to $10,000 for each violation of the Arizona fraud act. Rick Simon of the media relations department of Bank of America Home Loans responded to the Arizona suit and a similar one filed in Nevada by saying the company shares "with the Attorneys General the 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 multi-state discussions led by Attorney General Miller in Iowa to try to address foreclosure related issues more comprehensively," Simon said."That is the approach that will best broaden programs for homeowners who need assistance." "Bank of America has been a cooperative partner with the Attorneys General, and has worked with state leaders to evolve programs and resources to broaden assistance to distressed customers," he said. "We are already underway with further improvements to our processes and programs for Bank of America customers." Write to Christine Ricciardi. Disclosure: The author holds no relevant investments.