Bank of America Giving Incentives to Employees to DENY Loan Modifications

Bank of America Corp. (BAC), the second-biggest U.S. lender, rewarded staff with cash bonuses and gift cards for meeting quotas tied to sending distressed homeowners into foreclosure, former employees said in court documents.

Mortgage workers falsified records and were told to delay U.S. loan-assistance applications by requesting paperwork that the Charlotte, North Carolina-based bank had already received, according to statements from ex-employees filed last week in federal court in Boston. The lender improperly disqualified applicants to the Home Affordable Modification Program, or HAMP, according to a May 23 statement from Simone Gordon, a loss-mitigation specialist who left the company in 2012.

Bank of America Corp. is being sued by homeowners who didn't receive permanent loan modifications after making payments under trial programs, according to court papers.

“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,” Gordon said. Managers instructed staff to “delay modifications by telling homeowners who called in that their documents were ‘under review,’ when in fact, there had been no review,” she said.

Bank of America, which has spent more than $45 billion to settle claims tied to its 2008 takeover of Countrywide Financial Corp., is being sued by homeowners who didn’t receive permanent loan modifications after making payments under trial programs, according to court papers. Statements from seven former loan employees were included in a filing last week as part of plaintiffs’ attempt to gain class-action status. The lender has denied the allegations.

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Gift Cards

Bank of America has helped the most homeowners under HAMP and is committed to assisting customers at risk of foreclosure, Rick Simon, a company spokesman, said yesterday in an e-mail.

“At best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees,” Simon said. “While we will address the declarations in more depth when we file our opposition to the plaintiffs’ motion next month, suffice it to say that each of the declarations is rife with factual inaccuracies.”

The lender unsuccessfully tried to dismiss the complaint in 2011. U.S. District Judge Rya Zobel ruled that the case could proceed while dismissing some claims. Zobel is scheduled to consider the class-certification request at an Aug. 1 hearing.

Loan collectors who put at least 10 customers into foreclosure, including those who were in trial modifications, were given a $500 bonus, said Gordon, who worked at Bank of America for more than four years. Other rewards included gift cards for retailers including Target (TGT) and Bed, Bath and Beyond, she said.

‘Falsify Information’

Another former employee, Theresa Terrelonge, said loan officers were given restaurant gift cards and $25 cash awards for denying loan applications. The incentives moved workers to improperly reject applicants, Terrelonge said in a May 15 statement.

“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,” said Terrelonge, a loan servicing representative. This allowed managers to meet quotas for closed cases, she said.

Bank of America instructed employees to delay applications and mislead customers “as part of a deliberate practice of stringing homeowners along,” lawyers said in a June 7 filing.

Private Loans

The law firm is in contact with more than 1,000 Bank of America customers who said they completed requirements for a trial and were denied permanent modifications, attorney Steve Berman of Hagens Berman Sobol Shapiro LLP said in a court filing. Lawyers supported their claims with declarations from the seven employees, many of whom said they had access to the bank’s software, which allowed them to understand the process.

“I personally reviewed hundreds of files in which the computer systems showed that the homeowner had fulfilled a trial-period plan” before being denied, said William Wilson, a loan manager who left the firm in August. “On many occasions, homeowners who did not receive the permanent modification that they were entitled to ultimately lost their homes.”

The bank offered some applicants who should’ve gotten HAMP modifications a more-expensive private loan that charged as much as 5 percent interest, compared with 2 percent under the U.S. program, said Wilson, a case-management leader overseeing 13 others.

The bank held a twice-monthly “blitz” in which thousands of cases were improperly denied, Wilson said. Employees would certify to the U.S. Treasury Department false reasons for rejections, he said.

New York

Bank of America was among five mortgage servicers that reached a $25 billion settlement last year with the U.S. and states to resolve claims of abusive foreclosure practices. The deal provided monetary relief to homeowners and establishes standards for servicing mortgages.

Those rules restrict banks from foreclosing on a home while a borrower is being considered for a loan modification, and set procedures and timelines for reviewing loan-modification applications from homeowners.

New York Attorney General Eric Schneiderman said in May that he intended to sue Bank of America and Wells Fargo & Co. (WFC), the largest U.S. mortgage lender, for violating terms of the settlement related to processing modification applications.

Schneiderman’s office has been alerted to the filing of the former employees’ statements, said Linda Tirelli, a White Plains, New York-based lawyer who represents clients seeking modifications from Bank of America. She included the documents in a letter to the attorney general dated June 13.

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‘Sitting Around’

The banks aren’t “fulfilling their obligations under the national mortgage settlement,” Tirelli said. “After a three-month trial basis, they’re supposed to promptly deliver a loan modification. My clients have been sitting around for six, seven, eight months and still don’t have a permanent modification.”

Bank of America said last month that New York’s claims are “entirely baseless” and argues that under the settlement, the state has no right to file an enforcement action against the company.

The case is In Re Bank of America Home Affordable Modification Program (HAMP) Contract Litigation, 10-md-02193, U.S. District Court, District of Massachusetts (Boston).

To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; John Pickering at jpickering@bloomberg.net

Original Article - www.bloomberg.com/news/2013-06-14/bofa-gave-bonuses-to-foreclose-on...

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Comment by Mike Linkenauger on July 23, 2013 at 11:29pm

Jan, people just don't care.  The tail wags the dog, and there is nothing we can do about it.  I remember six months ago when we exposed Fannie Mae for attempting to artificially inflate real estate prices nationally.  The evidence was overwhelming.  People just don't care unfortunately.  I don't think its apathy for many, its powerlessness and hopelessness. 

Yes, the Indymac deal is extremely old news, and that whole viral video scheme a few years ago actually incorrectly reported the deal with FDIC.  It also was NOT with Goldman Sachs, but a couple former Goldman execs who founded One West. 

Anyway, people miss the insanity of our current mortgage market and most are clueless as to what is really going on with FHFA / Fannie / Freddie and the FDIC. 

Comment by Jan Sanderlin on July 23, 2013 at 10:16pm

Joe, turn that yawn into an out right protest and rage...It is because of that yawn that BofA, Goldman Sachs, Government, et al get away with it. Are you aware of the sweet heart deal that Goldman Sachs cut with the Feds??? Goldman Sachs bought Indy Mac as One West Bank with provisions in place that make them completely whole no matter what OWB decides to do... All of you out there doing short sales with these ding a lings pay attention.  It doesn't matter if they foreclose or short sale.  The Feds are making up the difference. Yeah, that's right, it is easier to foreclose than deal with a bunch of emotional Realtor's and short sales!  . So whether or not OWB forecloses or short sales, the Feds are making them whole on the FACE VALUE OF THE NOTE that OWB bought at greatly discounted values.  It seems that when there is PMI involved, OWB makes more money when they foreclose.  God forbid that the PMI companies do their job to insure the Investor on the loan so it seems. Ever wonder why your Indy Mac/OWB short sale took for freakin ever just to wind up being foreclosed??? Well, now you know... A very especially worded letter from an attorney can get the PMI company to back off, accept,  participate and move forward on your short sale.  The one thing that our fore fathers of our country wanted more than anything else was a country that was not for the elite.  Our Congressional and Senate Leaders have laws and concessions that set them apart from us and yet we are still  accountable to the laws of our land but not them... I certainly hope that our country's current apathy fades.  It is time for everyone to stand together and state (scream) that we are mad as Hell and demand accountability from our Government and our elected officials. If we continue to sit here quietly, then  we condone their behavior...Be vocal to your Representatives and let them know that the status quo is no longer  going to be tolerated...You have a voice...let it be heard through out our great land and please  let your elected officials know that you are mad as hell and that this has to stop or you vote them all out of office! We have the power in numbers if we ever decide to stand in it...  

Comment by Joe Azzolino on July 23, 2013 at 4:29pm

This practice is still happening today, nothing has changed with BOA.....they will stall as long as humanly posible It's as frustating as it gets!

Comment by Jan Sanderlin on July 23, 2013 at 3:22pm

Actually, it started, again, in 2005 when the first short sales in this cycle started...I was doing short sales in 2005 and 2006 and then it hit big and I was doing 15 to 20 a month in 2007...The last cycle ended in 1996 when I was still in Santa Barbara.  It seemed like the entire country had recovered except for Santa Barbara.  The Bank's Loss Mitigation Departments were not yet formed or staffed and loss mitigation was still a function of collections and we all know about what happens in collections.  They lie, cheat and promise whatever is necessary to get those non performing assets back on track...

Comment by Joe Beauchamp on July 23, 2013 at 3:19pm

Yawn, and what else is new? How about Goldman Sachs actually hording aluminum to manipulate that market? I'm sure they'll pay a heavy $10 fine for that. And didn't someone shake a finger at HSBC for money laundering for drug cartels, gun runners, etc? Boy, are they smarting.  Good thing shootings and drugs are not problems in the US. Yeah, I'm sure BofA is quaking at the thought of a possible come-uppance, eh? Maybe the the gov't will get Sesame Street to boycott the letters B and A for a week? That'll show 'em!

I'm afraid that with the "whatever you want donor bank" feds/politicians and the "corp's gone wild" Supremes, something much bigger has to happen before people hold our gov't and politicians accountable to rein back bank moral corruption. (moral because whatever has not been made legal by our(?) representatives, they just declare legal right now.)

Comment by Phillip Allen on July 23, 2013 at 2:30pm

Mike & Ben, we knew this was happening back '10 & '11... the flood gates had been breached and BofA as well as every other "too-big-to-fail" financial institutions were on their heals... now its come back to roost...!!! 

Comment by Mike Linkenauger on July 23, 2013 at 12:59pm

I have seen this for myself as well Jan.  As a member of the MBA I attended and set up as an exhibitor for SSSN at a couple conferences.  What you said below was VERY easy to see.  These "who's who" in the industry really had no clue how things really were and didn't seem to care how they could really better help customers.  Looking back, these practices would also explain why servicers would NOT want to work with the Short Sale Specialist Network and find good agents to facilitate short sales.  Why would they, when they make MORE money in servicing fees by going through foreclosure and dragging out the default process.

Comment by Jan Sanderlin on July 23, 2013 at 12:46pm

After spending 15 years in Corporate and Private Banking, I am not surprised a bit.  BofA is well hated with in the industry by most everyone.  The Banking industry is predominantly the Good Ole Boy network which is still very much alive and thriving.  I worked for at least 6 Privately held banks who were then purchased by Corporate Banks.  When trying to get Senior Corporate Management to acknowledge loyalty and hard work with raises, I was told repeatedly, that the employees would just spend it if more money was given to them.  My point to them was that a loaf of bread cost the same no matter who was purchasing the bread.  I would then find another privately held bank to work for after the excruciatingly painful conversion process, only to have this happen again and again. There is an abundance of ignorance and self serving attitudes within the Banking Industry.  I came to realize that it is an industry that draws management from the bottom of the barrel and that the Peter Principle is alive and well.  More often than not, incompetence is rewarded by promotion.  

Comment by Ben Benita on July 23, 2013 at 12:24pm

...........definiteley explains a LOT.....

I GUARANTEE the class-action attorneys are foaming at the mouth (as well they should adn I HOPE THEY WIN BIG)!!!

I wasted a TON of hours myself trying to help homeowners.....now only to find they were being lied to!!!!

Just ridiculous.....

Comment by Mike Linkenauger on July 23, 2013 at 12:12pm

I saw this in Mortgage Servicing News last week and had to share it.  I'm surprised it didn't get MORE media attention.  Messed up practice, but doesn't surprise me a bit.  Actually, it answers many questions...

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