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Friday, September 30, 2016

Bank Of America Lied To Homeowners And Rewarded Foreclosures, Former Employees Say

Bank Of America Lied To Homeowners And Rewarded Foreclosures, Former Employees Say

by Paul Kiel ProPublica.

Bank of America employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure, according to sworn statements by former bank employees.

The employee statements were filed late last week in federal court in Boston as part of a multi-state class action suit brought on behalf of homeowners who sought to avoid foreclosure through the government’s Home Affordable Modification Program (HAMP) but say they had their cases botched by Bank of America.

In a statement, a Bank of America spokesman said that each of the former employees’ statements is “rife with factual inaccuracies” and that the bank will respond more fully in court next month. He said that Bank of America had modified more loans than any other bank and continues to “demonstrate our commitment to assisting customers who are at risk of foreclosure.”

Six of the former employees worked for the bank, while one worked for a contractor. They range from former managers to frontline employees, and all dealt with homeowners seeking to avoid foreclosure through the government’s program.

When the Obama administration launched HAMP in 2009, Bank of America was by far the largest mortgage servicer in the program. It had twice as many loans eligible as the next largest bank. The former employees say that, in response to this crush of struggling homeowners, the bank often misled them and denied applications for bogus reasons.

Sometimes, homeowners were simply denied en masse in a procedure called a “blitz,” said William Wilson, Jr., who worked as an underwriter and manager from 2010 until 2012. As part of the modification applications, homeowners were required to send in documents with their financial information. About twice a month, Wilson said, the bank ordered that all files with documentation 60 or more days old simply be denied. “During a blitz, a single team would decline between 600 and 1,500 modification files at a time,” he said in the sworn declaration. To justify the denials, employees produced fictitious reasons, for instance saying the homeowner had not sent in the required documents, when in actuality, they had.

Such mass denials may have occurred at other mortgage servicers. Chris Wyatt, a former employee of Goldman Sachs subsidiary Litton Loan Servicing, told ProPublica in 2012 that the company periodically conducted “denial sweeps” to reduce the backlog of homeowners. A spokesman for Goldman Sachs said at the time that the company disagreed with Wyatt’s account but offered no specifics.

Five of the former Bank of America employees stated that they were encouraged to mislead customers. “We were told to lie to customers and claim that Bank of America had not received documents it had requested,” said Simone Gordon, who worked at the bank from 2007 until early 2012 as a senior collector. “We were told that admitting that the Bank received documents ‘would open a can of worms,'” she said, since the bank was required to underwrite applications within 30 days of receiving documents and didn’t have adequate staff. Wilson said each underwriter commonly had 400 outstanding applications awaiting review.

Anxious homeowners calling in for an update on their application were frequently told that their applications were “under review” when, in fact, nothing had been done in months, or the application had already been denied, four former employees said.

  • Dominick Vila

    Hopefully Eliabeth Warren, our lonely crusader, will step up to the plate once again and tackle this travesty. The effects of obtuse economic policies, deregulation, fiscal irresponsibility, and laws that favor the elite at the expense of the middle class and the poor take a back seat when we consider that some of the institutions we trust with our money were doing everything they could to profit from the chaos we just endured, including putting people on the street without reason. I hope the people responsible for things like this end up in jail, but it will never happen. They will, most likely, be promoted for their contributions in helping the bottom line.

  • TimeTheMiddleClassRanThisShow

    and the vatican is one of the largest stockholders of this bank. Interesting,, vatican caught money laundering in Italy this past year too. (Also money laundered in the USA in the late 80’s)

  • disqus_ivSI3ByGmh

    Ah, another “Class Action Lawsuit”. That means all those folks who were wrongfully dispossessed of their homes will get debit cards worth about $1000 each and the lawyers will collect around $200 Million. How about getting these folks their homes back, instead?

    • JSquercia

      This is less a bank than a criminal enterprise .It should be put down like a rabid dog and those responsible should wind up in Jail .However since that is unlikely to happen perhaps some of those defrauded homeowners will use those second amendment remedies our Tea Party friends seem to favor .

      Were I the Judge in this case I would Order the bank to either pay the former owners the FULL price of the home or return it to them without a mortgage .

      • robertblair3174

        My thoughts exactly. If these cases were prosecuted the way they deserved, The employees would be doing long prison sentences, and ALL of their assets (cash, homes, bank/brokerage accounts, even their cover businesses) would be seized. (Not just “Slap on the Wrist fines)

    • idamag

      In my community, I belong to the Occupy Group (non-partisan and non-violent). A woman’s house was being foreclosed. We actually had a lawyer on our group who agreed to represent her pro-bono. We, ourselves, collected money for her defense. When they found all the disparities in the bank contract, she was allowed to keep her home and get a more honest contract. This happened two years ago. Yes, they did a lot of hanky panky with the mortgages.

      • Thank you for sharing a story of positive action by Occupy groups. I think we need more media cover of the activities. And less coverage of made up drama.

  • Germansmith

    I honestly fail to understand what Bank of America was to do with thousands of properties that were probably damaged by their angry previous owners in an underwater market when given the people with a proven income a chance to paid would have made more sense in the long run.
    It seems to be that it will probably prove to be institutional management stupidity

    • 788eddie

      Germansmith, I would respectfully suggest that you missed the point on this. If the banks weren’t selling so many properties to people who really didn’t qualify (but were being sold on the “American Dream”), then the upward pressure on the prices of houses (“the bubble”) might have been much less. Because banks (and even more, mortagage companies) did this, we were also being set up for the bubble to burst (when the time came that these unqualified people couldn’t support the debt they incurred).

      Banks and mortgage companies didn’t do this to sell homes; they did this to make money from the fees and interest on the mortgages they sold for those homes.

      We all paid for what our financial institutions did.

      • Germansmith

        Eddie
        I lived in Miami, have an inactive real estate license and bought stressed properties from banks at a fraction of the money the originally lend for it

        The fees banks charged for those mortgages do not even closely make up for the loan losses, maintenance of the property, paperwork and the cost of paying the taxes after the foreclosure. If the lender have an steady income, it is usually better to modify the loan than to take the property in foreclosure…it is common sense.

        The mortgage bubble disaster have many fathers and mothers, we can not blame it on a single entity. Government, Financial Institutions, Lenders as well as borrowers were equally guilty.

        But like with most bubbles there were losers and winners, but even in Miami, most properties have not reach the same pricing level as 2007.

        • Dominick Vila

          Don’t forget the greedy builders that saturated the market, and the speculators that contributed to out of control and unrealistic real estate price increases. All for a quick profit.

          • Germansmith

            Well
            Builders build based on demand reports while risking their money and/or even their companies, and while they do that, they create jobs for all sorts of well paid construction workers. When demand went down, a lot of them lost their companies and/or still on the hook to their banks.
            Speculators did contributed to the price increases, but the biggest factor to the price increases were cheaper mortgages and a lot of them sold with little or no documentation. Not everybody have savings or an income to own their own home.
            A lot of speculators as well as a lot of my clients that took money from their investments or from great annuities to invest in real estate (against my advice), lost serious amounts of money. Nothing wrong to try to make a quick profit as long as you are aware of the risks and are able to recover if things go South.

        • 788eddie

          Somehow, I have a problem with putting the blame for the mortgage mess on the poor (we heap blame on them for so many things already) when we had so many other people making out like bandits during this period.

          Sure, the banks may have given mortgages to people who did not really have the resources needed to service them. Whose fault was that? Once the bank sold and was holding the mortgage, they would then turn around and sell that mortgage to a mortgage holding company (Remember getting a note from the bank informing you where your mortgage payment would now be sent?). The bank would now have more money with which it could make another mortgage (getting all of the fees in the process).

          The mortgage holding companies would then break out and repackage all of their mortgages as CDOs (collateralized debt obligations). These would be sold to investors and rated according to risk.

          Blame the poor homebuyer who probably ended up losing just about everything in this process? I have a problem with that.

          • Germansmith

            I am not blaming the poor…Just the uninformed and uneducated
            So it happens that sometimes the uninformed and uneducated end up being poor or becoming poor…..

            Since the beginning of time, lot of sales people sell stuff where the main purpose is their own profits and not the client’s benefits. Caveat Emptor
            I am really sorry for the person who at that period of time decided to buy their first home. These people should received all the help we can give them to give them a fair deal.
            But, if you had a house and were tempted by the market upswing and speculation and desire for a quick profits crept in their mind to jump into an unstable market…caveat emptor.

            If banks for the sake of convenience or stupidity broke the law while processing foreclosures, they should be prosecuted and so the officers making those decisions.

            Regarding CDO, Mortgage Banks do not create them. Large Financial Institutions (Like Merrill, Goldman-Sachs and such) do and presented erroneous information to insurance companies (like AIG) to get them insured (and therefore improve the risk rating).
            If I was going to nail anybody for the Mortgage Bubble and market crash…it would be those institutions

      • idamag

        And when a potential buyer said they couldn’t afford the properties, the bank said they would be able to sell and double their investment in a year. The contracts were horrible. The advice they got from the realtors and banks was also bad. I have heard people say that the buyers should have known better. The buyers got banks and realtors to keep things straight. The finger pointers themselves could probably had been duped. I remember when our growing family needed a bigger house. We fell in love with a house that we thought had everything. The realtor sat down with us and we did some figuring. He showed us where we could not afford that house. He gave us a formula. Part of the formula said if the mortgage payment was more than 1/6 of our income we would flounder and lose the house. We were young and we weren’t that savvy. Without the honesty of the bank and the realtor we, too, could have gotten in trouble.

  • bckrd1

    What they did to people was not only criminal it was cruel. The emotional stress they subjected these people to with their delaying tactics is unconscionable. I wonder how many people became ill from this stress these bankers caused? I am glad to see and hear these former employees coming out with what BOA did since we have known they were doing this but denying it. If it is at all possible, people with bank accts with them should close all of their accts and bank elsewhere.

  • FredAppell

    Nothing BOA does surprises me, I had a very negative experience with them years ago.
    I was trying to cash a paycheck that was drafted from their bank and I was told that I had to keep rotating to the back of the line because I didn’t have an account with them myself. This was the branch manager that told me this. My response to her was that my employer has his payroll account with them and she informed me that she didn’t care about that. I told her that preferential treatment is wrong and she didn’t disagree but she said that is their policy. I opened an account the very next day with a different bank.
    My niece worked for BOA as a teller, she has plenty of horror stories of misconduct that has occurred them.

  • Robert P. Robertson

    If you look at the top ten culprits on the list of violators that has placed America in the top ten list of violators of the Universal Declaration of Human Rights, Capital One is Number One, and for the same reasons listed above.

  • quasm

    Why don’t these people just pay the obligations into which they legally entered?

  • tax payer

    If you know you can’t afford to buy a home you shouldn’t buy one, so both parties are at fault. One for Financing the loan and one for taking the money knowing full well they can’t make the payments every month.