The federal HAMP loan modification program was intended to give distressed homeowners an expedited process for finding out if they were eligible to reduce the amount they were paying on their home loans. But one of the through-lines seen in all the statements given by the former employees is a repeated allegation that Bank of America executives instructed employees to do whatever they could to slow down this process — and to do so by blaming the homeowner.
“Though Bank of America required that applicants immediately provide financial documents — often on short notice, Bank of America allowed these documents to sit for months without ever reviewing them,” says one former Case Management Team Manager, responsible for 13 Customer Relations Managers, who are each supposed to be the required single point of contact for distressed homeowners looking to apply for a HAMP mod. “I regularly received calls from homeowners and reports from CRMs stating that the homeowner had sent in documents months earlier, often multiple times, made payments under a Trial Period Plan, but had not gotten a permanent modification or even a decision regarding their modification.”
Using BofA’s in-house computer systems, he says he was able to confirm that these documents and payments had been received, but state “it was clear that Bank of America was regularly receiving time sensitive financial documents from homeowners seeking HAMP modifications and not acting for months on end.”
Among the tactics allegedly used by BofA were “claiming that documents were incomplete or missing when they were not, or simply claiming the file was ‘under review’ when it was not.”
A former collections staffer from Texas says that when BofA purchased loans from other servicers — including those times when it acquired the actual servicer — the bank allegedly “forced the homeowners to restart the modification process. When a homeowner called regarding a modification started with another servicer, my co-workers and I were instructed to say that Bank of America had no record of the modification or of the payments the homeowner already made under the modification. We were instructed to make this statement even when Bank of America’s system showed the homeowners’ modification and previous payments, and even when the system showed that the homeowner had completed the trial process with the previous servicer and should have received a permanent modification.”
And a loan origination officer from Dallas claims that Bank of America often had homeowners send their documents to third-party companies who would then place them into BofA’s computer system. But which system?
“[T]hese documents would be scattered over various links in the computer systems,” he states. “The documents were present, but they often could not be viewed using a single system… Most underwriters did not know that they needed to look for documents in multiple [up to 4] systems and often assumed documents had not been sent. As a result, many borrowers were denied loan modifications they should have received.”
WHAT’S BAD FOR HOMEOWNERS IS GOOD FOR BofA
The team manager alleges that BofA’s goal in pushing for these delays and rejections — a program that he says came down from a Vice-President in charge of modifications for the entire eastern U.S. — was to ultimately not grant modifications to homeowners, but to push them into a Bank of America refinance that has a higher interest rate than HAMP mods provide.
“The unfortunate truth is that many and possibly most of these people were entitled to a HAMP loan modification,” he states, “but had little choice but to accept a more expensive and less favorable in-house modification.”
Another former BofA-er, this time a Loss Mitigation employee in New Jersey, alleges that she and her co-workers were instructed to lie to customers about “lost” documents and create delays because “admitting that the Bank received documents would ‘open a can of worms’ since the Bank was required to underwrite the loan modification within 30 days of receiving those documents, and it did not have sufficient staff to complete the underwriting in time.”
She claims that her bosses also pointed out the upside to lying to homeowners.
“Site leaders regularly told us that the more we delayed the HAMP modification process, the more fees Bank of America would collect,” she states. “We were regularly drilled that it was our job to maximize fees for the Bank by fostering and extending delay of the HAMP modification process by any means we could — this included by lying to customers.”
After letting these documents sit around gathering dust for long enough to make them “stale” — about 60 days — the former team manager says he would be instructed to take part in a “blitz,” in which staffers would issue a mountain of rejections in a very short period of time.
“During a blitz, a single team would decline between 600 and 1,500 modification files at a time for no reason other than the documents were more than 60 days old,” he states.
To satisfy regulatory requirements, he says that BofA staffers were providing the Treasury Dept. with bogus information about the reason for denials.
“Justifications commonly included claiming that the homeowner failed to return requested documents or had failed to make payments,” he states. “In reality, these justifications were untrue.”
THE ULTIMATE REWARD
It’s easy to understand a bank’s financial motive for delaying and denying HAMP applications, but it surely must have taken a lot to get employees to deceive homeowners straight into foreclosure, right?
Not exactly, according to at least two former BofA staffers.
“Employees were rewarded by meeting a quota of placing a specific number of accounts into foreclosure,” says the Loss Mitigation staffer from New Jersey. “For example, a Collector who placed ten or more accounts into foreclosure received a $500 bonus. Bank of America also gave employees gift cards to retail stores like Target or Bed Bath and Beyond as rewards for placing accounts into foreclosure.”
Those who did not meet quota were subject to termination, says the former staffer.
Another former collections employee, this time from Texas, claims that people in her office were reward with “$25 cash, or a restaurant gift card” for meeting quotas on the number of HAMP accounts they could “close” — referring to homeowners whose applications were rejected.
And for that $25 in cash, she alleges that staffers went to extreme ends.
“I witnessed employees and managers change and falsify information in the systems of record, and remove documents from homeowners’ files to make the account appear ineligible for a loan modification,” she states. “This included falsifying electronic records so that the records would no longer show that the homeowner had sent in required documents or had made required payments.”
LYING TO THE GOVERNMENT AND TO THE PUBLIC
In addition to the one staffer’s claims that HAMP denials contained bogus justifications for rejection, other employees allege that BofA went even further in deceiving the federal government and the public.
The loan origination officer from Texas questions BofA’s reports to the Treasury Dept. — and public statements about these reports — involving the huge volume of successful modifications it was providing to homeowners.
“Often this involved double-counting loans that were in different stages of the modification process,” he alleges. “It also involved counting loans that were entitled to modifications as having been modified — only to foreclose on those same loans later. It was well known among Bank of America employees that the numbers Bank of America was reporting to the government and to the public were simply not true.”
For its part, Bank of America claims that these statements are “rife with factual inaccuracies,” though it does not cite what those inaccuracies might be.
“We continue to demonstrate our commitment to assisting customers who are at risk of foreclosure and, at best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees,” reads a statement from BofA to Reuters.
These statements — which can all be read in their entirety at ProPublica — are part of a lawsuit filed by homeowners who were granted a trial modification, made all of their payments, but whose applications were not processed in a timely manner. A consolidation of 29 separate lawsuits from around the country, it is currently seeking class-action status.