Banks Gone Amok, Unlawfully Foreclosing

“Darnit, where was that mortgage modification paper? I knew I put it somewhere. Oh well, let’s just foreclose on these people’s house. STAMP! Whoo, that was tough. Time to treat myself to a Diet Coke.” That’s an imaginative reenactment at what’s going on inside the mortgage departments of the biggest banks in America: total disorganization, the right hand not knowing what the left is doing, a bureaucratic and document-strewn nightmare that can swallow up people’s homes right from under them.

So Gomez applied herself. She twice succeeded in getting Bank of America to postpone the sale date and said she was assured it would not happen until her application was reviewed. Gomez had opened a smaller salon and understood there was a good chance she would qualify.

She was still waiting in March when a Realtor, representing the new owner of her home, showed up. Her house had sold at auction — for less than half of what Gomez owed. “They don’t give you an opportunity,” she said. “They just go and do it with no warning.”…

…Under the federal program, which requires servicers to follow a set of guidelines for modifications, servicers must give borrowers a written denial before foreclosing. When Gomez called Bank of America about the sale, she said she was told there was a mistake but nothing could be done. She did get a denial notice — some three weeks after the house was sold and just days before she was evicted.

People who want to contest a foreclosure under the federal program are told to call the HOPE hotline at 888-995-HOPE, staffed by counselors who can escalate issues. However, anecdotal evidence suggests that oftentimes callers receive rote information instead of solutions.

Disorganization at Banks Causing Mistaken Foreclosures [ProPublica]

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  1. diasdiem says:

    How is this stuff not legally actionable? Why are people not suing these banks?

    • Applekid ┬──┬ ノ( ã‚œ-゜ノ) says:

      If they’re in the foreclosure crosshairs there’s a good chance they can’t afford a lawyer willing to take on a huge corporate bank.

      • diasdiem says:

        Gross negligence, loss of home, and mental anguish? I would think that would be a case rife with all sorts of damages.

    • astraelraen says:

      My sister-in-law sued their mortgage holder (bank) early last year in an issue unrelated to foreclosure, but related to some loan/fraud issues on their part. It went on for about a year and at least 5,000 in legal fees to her.

      The end result was no resolution and she was out 5,000. Banks make it painfully hard to resolve anything, even using the legal system. Her lawyer was even frustrated with the whole process because the bank basically used every attempt possible to stonewall them and make the process take longer for no apparent reason.

      • Bob says:

        And the lawyer would not take the case on a contingency? If this lawyer wanted billable hours only then I would’ve said forget it.

      • oldwiz65 says:

        The banks have the judges in their pockets and know they can get away with anything short of murder.

    • Evan says:

      The correct number for the HOPE hotline is 888-995-HOPE…not the number listed in the article.

    • P_Smith says:

      What I’m wondering is why consumers aren’t organizing a class action lawsuit. We’ve got the internet people, and we know it’s happening by the thousands.

  2. SkokieGuy says:

    My mortgage modification nightmare (yes sent in, but not published by Consumerist) was with Citibank.

    After submitting my online paperwork for the fourth time (each time receiving an automated response that I met the requirements), I called, yet again to check status.

    A US based CSR took my call and very sympathetically explained that I was not in the system yet because “We are so swamped with online applications. We have to print them, then scan them into our system. It takes time, but you should be hearing from us soon.”

    This was only the tip of the iceberg. After 7 months of attempting to receive the modifications that I qualified for, I simply refinanced with another bank to insure that Citibank does not receive another dime from me.

    If Congress every grows a pair and decides to break up too-big-to-fail banks, I will be there, like the public at the Berlin Wall, with a sledgehammer in my hands.

    • Ben Popken says:

      Can you re-email your story to me, ben@consumerist.com?

      • SkokieGuy says:

        Ben, I’m afraid my three page single-spaced diary of events (and snappy Consumerist summary) is long gone, tossed when I finally refinanced.

        I started the process in 09 literally the morning after Obama announced the program. In August 09, I gave up and in October, refinanced to at least take my money away from Citibank, (and to get 4.25% for 7 years).

    • TechnoDestructo says:

      All that inefficient duplication of administrative effort going on when you have a bunch of small banks means you have more people available to handle shitstorms like this.

    • ColoradoShark says:

      “print them and scan them”??!! I had to read that about five times.

      Seriously? It is in electronic format, sent to a printer to be made into paper format and then scanned in. Are they looking for a stupid merit badge?

      • Commenter24 says:

        Probably comes in some proprietary program that doesn’t generate PDF or doc images. Why they don’t just print to PDF is beyond me, but I suppose if they are trying to move the data from proprietary program to proprietary program…

        Either way, horribly inefficient, but the IT department is probably either too 1) lazy, 2) stupid, 3) uninformed, or 4) cheap/poor (budget wise) to fix it.

        • kcvaliant says:

          Or it lengthens the time to where the people do not have to do as much or can say ‘oops it never got here’ something must of happened, we need you to resend it..

        • Rectilinear Propagation says:

          5) overwhelmed with other work
          6) have offered to fix it but the people in charge don’t think it’s important or worth it

          • Doncosmic says:

            overwhelmed with other work, one GPupdate and a force could install a program to do this across the board and then make it the default.

          • kujospam says:

            Last reason. National City Bank just got bought by PNC with Tarp money. Anyways. We are going back in time technology wise in about half of our stuff 30+ years. It’s really scary. The goal. Save money save money and save money.

      • stormbird says:

        Well, they could hand-cut the forms into granite, take digital pictures, print those and scan the pictures . Give it a week before BofA orders tons of granite slabs.

    • working class Zer0 says:

      I’m going through it right now…I was accepted into the mortgage modification program and made my first payment. My house was scheduled for sheriff’s sale two weeks later, I asked them to cancel the sale and they told me that they had to wait until the Monday before (?) the sale (which was on a Friday) to contact the sheriff to cancel. Starting that Monday and for the next three days I called the sheriff’s department (who told me they were not notified), The mortgage company (GMAC)who told me that their lawyers were notified to cancel with the sheriff and the mortgage companies lawyers who would not answer the phone or return my calls. Finally on the day before the sale I called the mortgage company and got ugly with them. Their lawyers responded and the sale was canceled. Funny thing is i believe it was the sheriff’s department that dropped the ball. It seems that they were notified that Monday and lost the fax.

  3. Commenter24 says:

    I don’t know why the banks even participate in these programs. Clearly they aren’t interested in doing much, which is their right and is 100% fine by me, but why complicate matters by “participating” in the government’s modification program? If the banks don’t want to modify and just want to foreclose and re-sell, why not just do that? Why tie your own hands with the government program’s requirements? PR?

    I’m not super familiar with the HOPE program, but if BofA followed all of the state-law requirements to foreclose and re-sell, I wonder if the home owner even has a meritorious legal action against BofA. If the HOPE program is just a contract between BofA and the Govt., presumably so BofA can get incentives to modify, wouldn’t the only action be a breach of contract suit from the govt.? I kind of doubt the HOPE program actually creates a “right” to the written denials, etc. that would be enforceable by the consumer.

    • Tom Foolery says:

      I don’t know why the banks even participate in these programs… Why tie your own hands with the government program’s requirements?

      It’s usually not up to the banks. Most of the time the bank is just servicing the loan for an investor– Freddie, Fannie, FHA, or someone else. If Freddie Mac decides to participate in a program, than anyone servicing Freddie Mac loans is going to participate in the program…at least for those loans.

  4. rpm773 says:

    People who want to contest a foreclosure under the federal program are told to call the HOPE hotline at 888-895-HOPE

    Phht. Hope. Yeah, that’s what someone who’s just had his house repossessed needs.

    As in, “I hope someone on the other end is competent enough to actually give me a hand with my problem.” Or, “I hope this organization can cut through the red tape, instead of adding to it.”

    • Applekid ┬──┬ ノ( ã‚œ-゜ノ) says:

      888-895-HOPE also spells:
      888-895-IORE
      888-895-IMP-3
      888-895-HOSE
      888-895-GORE

      I wish it was as fun as 555-SHOE. “Call, Dr. RGNE!”

      • rpm773 says:

        Mortgage problem? Feeling like talking it out with someone who’s as helpful as a vegetable?

        Well, then dial 888-895-GORD and talk to one of our many healthy..er..helpful representatives.

      • womynist says:

        Don’t forget, it also spells out 555-PINF

  5. howie_in_az says:

    This is why I am so afraid of doing the paperwork and perhaps getting a lower interest rate on my home. Maybe that’s what the banks want — make everyone too scared to touch their mortgage.

    • Applekid ┬──┬ ノ( ã‚œ-゜ノ) says:

      I feel exactly the same way. It was hard enough getting them to do the right thing the first time around.

  6. Loias supports harsher punishments against corporations says:

    This is another excerpt from the article:

    Last November, Michael Hill of Lexington, S.C., finally got the call he’d been waiting for. Congratulations, a rep from JPMorgan Chase told him, your trial mortgage modification is approved. Hill’s monthly payment, around $900, would be nearly halved.

    Except there was a problem. Chase had foreclosed on Hill’s home a month earlier, and his family was just days away from eviction.

    “I listened to her and then I just said, ‘Well, that sounds good,’.” Hill, married with two children, recalled. “‘Tell me how we’re going to do this, seeing as how you sold the house?’.” That, he found out, was news to Chase.

    Hill was able to avoid eviction — for now. Chase reversed the sale by paying the man who’d bought the home an extra $19,500 on top of the $86,000 [5] he’d paid at the auction.

    You’d think banks would add a process to prevent this, seeing by not doing it they are losing money. It’s as simple as adding a step to contact X department in the process. It’s not hard, but they sure make it seem like it is.

  7. TJ_in_IL says:

    The quickest and easiest way to prevent the forclosure after months of trying is to file chapter 13 (reorganize debt). Once filed, they cannot forclose.

  8. Invader Zim says:

    I can only imagine how that conversation went down. When a realtor shows up at her door and tells her it sold. Gee like what can you do after that.

  9. grapedog says:

    This is nothing… easysauce!

    Imagine if she had to buy tickets from ticketmaster! Oh, the humanity!

  10. GreatWhiteNorth says:

    Seems the system does not only reward those folks who stop paying their mortgage and eventually get kicked out of the banks house… but it also penalizes those who try to make it work following the rules and being responsible…

    Lesson learned … screw the banks… strip mine the bank’s house (was yours) of its valuable removable assets – copper, fixtures, mechanical systems, hells bells sell the trees from the yard and the lawn by the roll – then wait for the bank to kick you out… In the mean time live high on the hog with no mortgage or rent payments…

  11. chucklesjh says:

    Haha, “We screwed up but there’s nothing we can do to…”. Sounds like a load of horsecrap to me. They need to stop being a bunch of pansies and take responsibility for their mistakes.

    • Difdi says:

      Somehow I doubt “Sorry, we screwed up but there’s nothing we can do” will be accepted if it were a bank customer talking about a late payment…why do the people in charge of writing CSR scripts think customers would react any differently being told that?

  12. Covertghost says:

    This needs to have criminal penalties attached.

    It’s too ridiculous.

    • drjayphd says:

      Or at least quincentuple damages. A handful of these fuckups by the bank and they’ll owe the GDP of some countries.

  13. coren says:

    OMG WORST COMPANY IN AMERICA AMIRITE

    That out of the way (really, it’s getting old now) – the bank didn’t even bother to try and help her after they fucked up on the foreclosure sale, despite being very able to. Go figure.

    They need to be regulated, and far more so than they were before the shit that let the mortgage crisis happen

    • FredKlein says:

      OMG WORST COMPANY IN AMERICA AMIRITE

      Nah- Ticketmaster is worse. They have $2.50 convenience fees to instantly print your tickets, dontcha know!

    • S says:

      A. WCIA should be done quarterly with an end of the year runoff.
      B. The company that wins WCIA should only be pitted against the winner for the next year. The 2008 winner should not be in the running in 2009 except against the finalist (NOT finalists) for the 2009 WCIA.
      C. Anyone who wishes to complain about the outcome of WCIA in threads unrelated to WCIA should be disemvoweled and directed to an open thread titled “My candidate didn’t win” to discuss their views.

  14. wonderkitty now has two dogs says:

    We’re just stupid humans who expect to live in something other than a stable. It’s our fault for having expectations and standards. The banks aren’t people- they’re BETTER than people.

    The banking (and airline) industry can go to hell.

  15. JustLurking says:

    Until — as another poster suggested — Congress grows a pair and puts some real teeth into banking reform, this will continue. (Sorry about mixing body part metaphors there.)

    I more Libertarian than anything on the political spectrum, but when the government pours trillions into the banking and finance system, you’d think they’d have actually done something — anything — to help the little guy, you know, the voter.

    All civil rights as know them today date from a bunch of angry, rich white guys, presumably with pitchforks or blunderbusses, harassing King John into signing the Magna Carta at Runnymede in order to protect their property rights. Civil rights and property rights are intertwined and one and the same. First, we had the government seizing land for hungry corporations, approved by the Supreme Court in 2005 in Kelo vs. New London and now we have governmentally anointed, too-big-to-fail banks simply taking people’s property with little to no recourse, even if they do admit mistakes.

    I find the tea baggers to be douchebags in general, but maybe they should direct their anger at the corporations pulling the strings and not the guv’ment.

    • Economists Do It With Models says:

      Maybe if BoA and Chase were run by black dudes, the tea baggers would…duh.

  16. Economists Do It With Models says:

    Bank: “Oops, we’re sorry, it was a total, um, oversight on our part that we sold your house without telling you. No, no, we weren’t trying to surprise you so that you didn’t know to bulldoze it or lock yourself inside or whatever…no, not at all. Just an honest mistake.”

  17. oldwiz65 says:

    The banks know full well they are immune to anything congress might do to stop their shenanigans. They pay large amounts of money to campaign contributions and gifts of money, hookes, and drugs to elected officials to keep them away while they screw citizens. They have enough expensive lawyers to make it impossible for anyone to defend themselves. It’s the worst when you don’t even have a mortgage with the bank and yet they somehow manage to foreclose and sell your house out from under you and you are left out on the street, homeless. They know full well you can’t afford to go after them in court so they can do whatever they damn well please.

    • NewsMuncher says:

      And if you’re homeless, what are the chances of your turning to prostitution to make ends meet, thus putting yourself into the position of being the very hookers that these corporations gift to politicians to sway them?

  18. introvertedambition says:

    Does anyone know the legality of this? Citimortgage is doing this to me right now. Originally I thought that this was a good idea to help cut down on a bill. During the process citi kept requesting the same information and then saying that the information needed to be sent again because it was over 3 months. The process kept doing the same thing to where they would take over 3 months and not say they needed anything. I am on my 9th month now and they without warning said I wasn’t approved because of missing paperwork- one of my statements did not have my address on it. It took 9 months to figure that out. Now they are threatening foreclosure…no one knows what my actual payments are….is this legal???Any information from the consumerist group would be appreciated. I don’t want my house foreclosed on for 900 dollars.

  19. Difdi says:

    Ok, correct me if I’m wrong, but…

    The law says that notification must precede any foreclosure by a certain amount of time. Foreclosure follows a set legal procedure, which often specifies a certain number of notifications or time delay periods (depending on the state). An eviction cannot come before foreclosure.

    The OP was notified of the denial three weeks after the sale. In other words, the foreclosure came first, then the sale, then the denial, then the eviction a couple days after the denial? That’s not legal. Simply put, the proper response is to demand all parties obey the law, and refuse to obey an illegal order to vacate. After all, without a written denial and a foreclosure notification following it, there can’t be a sale, so that didn’t happen, legally speaking. If there’s no sale, then there is no new owner. If there was no foreclosure, then there can be no eviction.

    All of that could be done following written notice of denial, but none of it was done after the notification, therefore it’s legally improper, and void. Now, outside of things like court judgments, foreclosures and eviction notices, there is no legal way you can walk up to someone’s house and kick them out. Use of force in self defense is fully justified.

    • ShruggingGalt says:

      Even in TX, if a homeowner uses deadly force against a constable/sheriff, he/she will go to jail. Even if the legal eviction notice was started by an illegal action.

  20. maldar says:

    I work IT for a big bank. We have a small department who’s sole job is to print documents from our ancient proprietary loan system, and then scan them into a digital image storing database. They even purchased a brand new multi-function print/scan/copy machine to do the scanning for them, since the little scanner they were using was just too slow. Yes, they print a document to this thing, then stick it back in to scan it. Sorry for the aneurysm. After questioning this process, I was given about 10 excuses not to change how they do things. People in banks are generally lazy, stupid, and more importantly ‘scared’. Why change something stupid that works when the change ‘could’ go wrong? Nobody wants their name associated with a screw up. Sadly, I really have nothing to do with the area, so I couln’t convince them to stop doing it. I was only asked for advice since they couldnt figure out how to get the thing to scan to the network. Also, they had already invested all kinds of money into a scanner instead of looking into the print to PDF driver that we already purchased licensing for and is installed on just about every PC.

    • pcPhr34k says:

      …Jesus Christ dude. PDFCreator is open source and FREE! I think I would have gone postal if I worked there…

      • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

        I can hear it now: “Open source software is how hackers gain control of your system. Our software is more reliable, because we paid more.”

        They *like* this makework crap because it keeps them from having to do REAL work.

    • pcPhr34k says:

      Haha, I think my last comment missed the point. How have you not lost your mind working there? Maybe if stuff like this was brought to light and more and more people discovered how lazy minded these people are, maybe shit like this would be the way of the Dodo?

      But then again, what if the people who see what is going on are lazy and do nothing?

      I think we are just plain screwed…

  21. parv says:

    Ha! Somebody pointed out to me, after I ranted about this situation during WICA 2010, that congress|government would|could punish a bank mistakenly forclosing. Not much good that does it seems. Moreover, said punishment would not be large enough in fines, I guess, (likely no jail) to hurt|teach the guilty bank.

    • magus_melchior says:

      Exactly. If corporations think that it is less expensive to break the law and pay the fine rather than do the right thing in the first place, they will break the law. It’s that simple.

  22. s2 says:

    well at least they forclosed on actual customers with a mortgage this time.. sheesh.

  23. Skipjim says:

    My job (such as it is) these days is to do occupancy checks on houses where the resident is either modifying their loan, in foreclosure, or already empty.

    I’ve seen cases where it’s taken upwards of three months, after a house has been sold, for the bank to stop sending me out to contact the OLD owner of the house.

  24. Bob says:

    And why is this not an actionable class action lawsuit? It is not like millions of banks doing all of this mess. It is only a very few that is doing a large percentage of this illegal stuff, mostly banks that are “too big” to fail. They are not too big to be sued under a class action lawsuit.

    And why is the Federal Government not filing criminal charges for each and every violation?

    Oh, I forgot the golden rule. He who has the gold makes the rules in this country nowadays.

  25. flyromeo333 says:

    hang on,…i know it takes money to open a business but, the OP was able to open a second salon?

  26. magus_melchior says:

    A bit of advice after helping my mom with her mortgage modification:

    BE PERSISTENT. If they don’t call you and talk to you for more than 10 days after the initial application or contact, call them and ask what’s up. Ask if they have all the documents they need (in my mom’s case, they needed foreign pension documents that had to be translated and notarized), ask them what stage in the approval process it is in, and ask them to contact you if there’s a problem. If they transfer you in a runaround loop, or hang up on you, CALL BACK. If you have a legitimate reason to make sure they don’t foreclose on you, then they do NOT have a legitimate reason to deny you assistance.

    Yes, it’s a pain in the ass. Yes, they may become annoyed. Yes, they may have trouble understanding you (if your English isn’t 100%). But if you’re upside-down in your mortgage, this is the best way to keep your application from becoming lost.

  27. NewsMuncher says:

    My parents are going through crap with Bank of America.

    It’s not that they are being foreclosed upon, to our knowledge.

    It’s that my parents SPECIFICALLY did NOT want to have their mortgage be with a big bank like Bank of America. They loathe and despise that bank.

    So, when they went to go buy their house, they got a loan from a small bank in the area where they were buying.

    Who then sold their mortgage to Bank of America.

    Now they are trying to refinance for a better rate with another company. And one company that offered better terms led them on for a while, before last week, when they called to inform that, hey, that rate they were offering them? They want to jack it up to higher than what their current mortgage is. Way to make a sale, guys.