Two whistleblower cases involving Bank of America shed new light on mortgage serving abuses by the banking giant. If on-going litigation proves the allegations true, the impact is likely to reach up to highest levels of executive leadership in the bank.
The evidence continues to build that something is very wrong at our nation’s largest banks. First, there was robo-signing of foreclosure notices. That apparently was the tip of the iceberg. Like peeling back an onion that is past its prime, the rot can be seen throughout.
Now two articles have emerged that peeled back another layer that details abuse by loan servicing banks and companies. Each one is important to homeowners and government regulators. Foreknowledge may help homeowners save their homes. The Consumer Bureau must hop on this one to stop what appears to be systemic abuse by mortgage servicing companies.
The first article authored by Ray Brescia of the Huffington Post is perhaps the most damning. Bank of America’s own former employees have filed sworn affidavit’s detailing business practices that promoted foreclosures. These allegations (as taken directly from the article) include:
- “Bank employees routinely lied to borrowers about whether their applications for mortgage modifications were complete and removed documents from the borrower’s file to provide grounds for rejecting such applications;
- Bank employees would delay consideration of modification applications and then force borrowers to re-apply for a modification because their applications were deemed stale;
- Bank officials offered bounties to front line employees and their supervisors for meeting foreclosure quotas, regardless of the merits of the bank’s claim;
- Bank employees routinely used deceptive tactics to steer borrowers away from modifications on favorable terms under the federal Home Affordable Modification Program (HAMP) and into agreements with terms that were far more beneficial to the bank;
- The bank lied to the federal government and the public about its loan modification performance;
- The bank would routinely purge backlogged modification applications and reject them without any basis for doing so; and
- Employees who challenged these bank practices were fired.”
As if this case is not bad enough, there is more. Another article published Friday, June 28th in Salon by David Dayen, “New Bank of America whistle-blower emerges: More customer abuse secrets,” outlines yet another layer (see link).
A class-action lawsuit initiated by Leonard Law Office against Green Tree Servicing is unveiling new allegations that involve Bank of America. Green Tree, along with Nationstar and Ocwen, are non-bank servicing companies. That means they do not originate loans, are not part of any previous settlement deal, and have less regulatory oversight. They are also looking to gain a dominant market share in the servicing sector. Each company has some of the worst reputations in the servicing industry.
The whistle-blower in the suit is claims Bank of America’s goal is to sell the servicing rights to mortgages in order to make money and remove the bank from any further scrutiny and avoid possible litigation. The bank sold 650,000 mortgages worth $93 billion to Green Tree in January 2013. The insider further alleges that bank executives, including CEO Brian Moyihan, were aware of the reputation of non-bank servicing companies.
It is further alleged that the bank will attempt to sell off as many delinquent loans as possible, including a pool of $1 trillion legacy loans (read from the Countrywide acquisition). The insider who provided the information to Leonard Law offices stated: “It may mean that any modification currently in process with BAC (Bank of America) will not be recognized and the borrower will proceed into foreclosure.”
What does this information mean to homeowners who have a mortgage serviced by Bank of America or one of the non-bank servicing companies? First and foremost, I recommend you use this information to protect your home. Even if the worst case has not happened and you are current with your mortgage, a life event can happen anytime. Second, write your member of Congress and make them aware of these cases. Ask them to take action. Homeownership knows no political boundaries.
It remains to be seen what effect new lawsuits being initiated by Leonard Law Office, New York State’s Attorney General and others and will have on banks who continue to ignore the settlements to which they are signatories. One thing is for certain. Banks have not shown an ability to police themselves as they have claimed many times. Until severe financial penalties are administered, it is unlikely that profitable and abusive behavior will end.