Bank of America Lies
Life's better when we're not getting screwed over by our hometown bank
Soon, perhaps as early as next week, U.S. Rep. Mel Watt of Charlotte will sit for his confirmation hearing in the Senate, and you can expect the Republican members of that honorable body to rear back and grill his ass.
The grilling won’t necessarily laser-lock on Watt's qualifications to lead the Federal Housing Finance Agency, although you could make a strong case against his confirmation on those grounds. It’ll be more about the role of Fannie Mae and Freddie Mac, the quasi-governmental mortgage middlemen that the FHFA oversees and that, in Wingnut World, precipitated the financial crisis of 2008 by willy-nilly enabling mortgage loans to welfare queens and crack whores because they hated America/capitalism, or something.
Implicit in their questions will be their fallback position about everything governmental, which is that whatever it is, it shouldn’t exist, and everything would run just beautifully if the bureaucrats would just get out of the way and let the market, a self-correcting mechanism, work its magic.
Ladies and gentlemen, Charlotte’s own Bank of America:
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 …
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 …
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.
Employees were rewarded for denying applications and referring customers to foreclosure, according to the statements. Gordon said collectors “who placed ten or more accounts into foreclosure in a given month received a $500 bonus.” Other rewards included gift cards to retail stores or restaurants, said Gordon and Theresa Terrelonge, who worked as a collector from 2009 until 2010.
In addition to the ProPublica story, Salon has published the affidavits. Peruse them at your leisure. Try to keep your breakfast down.
Mel Watt may not be the best man for the job. Fannie and Freddie may well be bureaucratic messes that hinder rather than help lenders make secure mortgage loans.
But let’s not kid ourselves that the financial services industry, left to its own ministrations, wouldn’t screw its valued customers into the wall as surely as mail them a 1099-INT form showing last year’s yield of $2.17 in interest income.