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The “In-House” Modification – What the BOA Declarations Point to

June 26, 2013 4 comments

Back in March, I spoke at the House Justice Appropriations Committee regarding Florida House Bill 87 which has since passed and been signed into law.  Here is that video and I start at 51:27 into it. http://thefloridachannel.org/video/3613-house-justice-appropriations-subcommittee/  You will hear Representative Mayfield (Vero Beach) question me afterwards about the fact that the banks told homeowners to “stop payment” in order to show hardship and a need for help in order to get a loan modification.  You will hear her say that it wasn’t a requirement of HAMP that the homeowner stop paying.

The fact is that Bank of America frequently (along with other banks) told homeowners this.  The script of “you have to be so far behind in order for us to help you” was commonplace, and led many, many homeowners into default and into a fraudulent modification scheme as we have now seen from the BOA declarations.

Now keep in mind if the homeowner was not required to “stop payment” in order to qualify for HAMP, but they were required to “stop payment” for the “in-house” modifications that presents an entirely different issue. Some of the declarations from the BOA employees illustrate that homeowners who may have qualified for HAMP were often given “in-house” modifications instead because BOA would profit off the higher interest rate for an “in-house” modification than they would off of the lower HAMP interest rate.

And BOA, on their own site, requires a homeowner to be at least 60 days behind before they can be helped with an “in-house” modification.  http://homeloanhelp.bankofamerica.com/en/bank-of-america-home-loan-modification.html

So at the outset this proves that callers BOA spoke with were not being considered for HAMP or they would not have been asked to “stop payment”.  They were being considered for an “in-house” modification from the start.  And this lines up with their own employee declarations that “in-house” modifications and foreclosures were preferred over HAMP modifications.

But weren’t they required to consider the homeowner for HAMP first?  Is that not why they were given money by the government?

The “stop payment” script points directly to what the employees are saying.  HAMP didn’t require a homeowner to stop payment, but some of their “in-house” programs did.  And if a homeowner was told to “stop payment” then BOA wasn’t considering anyone for HAMP as they alleged.  They were already targeting the homeowner for foreclosure or a higher interest rate alternative.

The Deliberate Default…What the BOA Declarations are Missing

June 19, 2013 4 comments

Danielle Kelley, Esq.

The propaganda from the banks has been far-reaching.   Even if they devised a scheme to fraudulently throw away a homeowner’s hope at a modification, they are still pursuing the “deadbeat” homeowner argument.  The essence is that the homeowner was not paying, so it doesn’t matter what happened after the homeowner defaulted.

That “deadbeat” argument is a myth.  Whenever I interview a client, I am careful not to lead them.  I simply ask the question, “What caused you to go into default?”.  Nine times out of ten I will hear, “The bank said I had to be so many months behind to help me.”  Or in the alternative, “My payments kept increasing and I didn’t know why.  I called the bank to ask and they told me that unless I was behind in payments they couldn’t help.”  After that the homeowner is left at the mercy of bank who is pretending to consider them for a modification, but yet fraudulently thwarting that process.

The first answer is the “stop payment” answer, which I have discussed in a previous blog.  The second answer is now what I call the “bait and switch” on escrow accounts.  Homeowners who pay monthly to the bank, unless agreed otherwise, expect the bank to take part of that payment and pay the taxes and insurance on the property with it.  If the bank does not, the escrow account goes into the negative and the homeowner has to make up the difference in the payment.  It is called an “escrow shortage”.  And no one is immune, not even those who pay every month, on time, and would not dare to consider themselves as people who would fall into foreclosure.

I have seen it time and again.  In one case, BOA inflated the escrow account $12,000 which resulted in a payment of $900 more per month.  That very case would become my own, with my father on our Note.  When he called to ask “why” the payments were going up he was given the script “To get that $900 off you need help.  We can’t help you because you are current on your payments.  You need to show us you need our help by making a partial payment.”  Later when the partial payment was not applied, BOA stated that to be considered for a modification we had to stop paying altogether.  Left with four years of modification attempts in bad faith, we were requested by BOA (in order to keep the modification file open) to record a quit claim deed to myself and my husband which came with a high price for documentary stamps.  We were told to submit letters to the bank, and then told we could not mention the “stop payment” language in them.  The letters had to be all about how we were suffering a “hardship” with no blame pointed towards the bank.  The reasoning?  They had to get Freddie Mac, the loan “owner”, to approve a modification, and Freddie wouldn’t dare approve a modification if BOA had done something wrong.  To this day, BOA wants to pursue a foreclosure, yet they have absolutely no explanation for what inflated the escrow account to begin with.

In another case, unrelated to me, other than my representation of my client, the bank stopped paying the insurance in full.  The homeowner had no idea that the insurance policy had lapsed until a year later when they were asked to make up for an escrow deficiency.  At a payment climbing hundreds of dollars more than they ever agreed to pay, when they had been making their payments in full and counting on the bank, per the mortgage contract, to pay the insurance, they were now faced with payments they should have never been liable for.  They were not a “deadbeat”.  They were paying in full all along.

Then the truth is brought to light, and the deadbeat argument fails because we learn that no one, not one person, is immune from this.  If a homeowner is making monthly payments and depending on a bank to pay the taxes and insurance, they are at the mercy of the bank. And often to a bank like BOA who is seeking to foreclose loans to get them off of their books, as their own employee declarations filed in the HAMP case in Massachusetts show us.

They have no incentive not to deliberately inflate a homeowner’s escrow account and cause the payment to rise to the point where the homeowner calls them and eventually ends up in default.  Their own employees have stated that they profit from foreclosures over modifications.

So before the argument is bought that the homeowner in foreclosure is a “deadbeat”, know this much, the bank can cause you to become a “deadbeat” too, even if every payment is made in full and right on time.

The Buck Didn’t Stop There…What the BOA Declarations are Missing

June 18, 2013 15 comments

Danielle Kelley, Esq.

After the shock (or lack thereof) and horror of reading the BOA employee affidavits, we are left with the bank argument that “the homeowner was already in default.”  What has not been the subject of suit yet, and what we have not heard about, is how they got there.

For years, attorneys have heard “the last thing the bank wants is a foreclosure” or “the last thing the bank wants is another house”.  Yet, the BOA affidavits paint a different picture.  Rewards and bonuses for putting potentially eligible HAMP files into foreclosure?  Why would the bank want a foreclosure?

Simple terms – think of a mortgage as a car. If you wreck the car you call your insurance carrier and have to justify it cause your insurance will go up. Same with modifying a mortgage. The bank has to justify to the investors why they have a bad loan on the books and admit it is their fault. But if your car gets hit by someone else you get to call the insurance carrier and collect money because you’ve been damaged. When the bank can claim foreclosure they can say they have been harmed by the homeowner and get the payout from the insurance carrier.  There is much more to it, but that is the gist of how it works.

This points to a system where the banks want to foreclose.  Keep in mind that BOA allegedly bought “bad” loans from Countrywide.  What do you do with so many bad loans on the books?  Easy, you put people into default, and then devise a fraudulent modification scheme to make sure the arrears are racking up.

Many of my clients faced “escrow shortages” on fixed rate notes.  When their payment kept climbing higher, they called the bank to ask “why”.  BOA was famous for contracting out their modification work to other vendors.  What the BOA employees told those companies to say to homeowners and what BOA would tell their own employees to tell homeowners is where it all begins.

“We see you are current on your mortgage.  You don’t need a modification.”

Faced with this the homeowner again asks “why”, and the answer is always the same:

“You need a modification.  You have to be so far behind for us to help you.  You are not showing us you need our help if you are current on your payments.  You have to show a hardship or an inability to pay.  You need to stop paying”

The homeowner is led to believe they will receive a modification if they stop payment, and any payments made were sent back to them during the modification process.  Nine months to a year later the modification is declined and the homeowner has to pay back all the arrears to resume payments on the loan.  Thus, they are left in a never ending modification cycle with BOA. And the “stop payment” requirement was not part of HAMP, so BOA had to be doing it geared toward foreclosure or the higher interest rate “in-house” modifications as their own employees state they were.

It is hard for many to believe that the bank would not want payments, but the BOA affidavits tell us why – they wanted foreclosures.  Still for many, it is easier to believe that the bank would want the monthly payments.  As easy as it once was for us to believe that BOA did not get all the financial paperwork and trial payments the homeowners were sending in because they were just such a large corporation that things would get lost.  Now we know better.

Dealing with what happened to the homeowners that were in modification review is only one piece of the puzzle.  Without looking at what put them there to begin with, we are missing the bigger picture.  Homeowners, current on payments, rightfully in their homes, were lured into a trap, and had they not been, no modification review would be needed.

Told To Lie…BOA Affidavits Tell All

June 14, 2013 9 comments

Danielle Kelley, Esq.

 I remember sitting at my desk across from my client and telling her we had to resubmit the financial paperwork for a modification with Bank of America.  She held her head in her hands and almost cried.  And I knew how she felt.  She, like I, had submitted financial packets sometimes totaling over 60 pages dozens of times in the past years.  Some clients had to go to local stores and fax the documentation at $1 per page.  Getting the documents in became a part-time job with a stress level that is indescribable.  The only explanation given?  The bank did not get the paperwork.  That was the theme, and most of us bought it.  The idea that Bank of America was so big, with so many offices, and so many different departments makes one think it would be easy for paperwork to get lost, so it gets resubmitted time and again, all to be told “you are not eligible”.

Come to find out, nothing was lost, and it was not a product of negligence, or an inability to keep up with paperwork for such a large corporation.  It was a product of fraud, deceit, greed, and the ability to cheat the American people out of billions in taxpayer dollars without losing a moment of sleep.

Months ago, Senator Warren, blasted those who regulate the banksters like the OCC and SEC for not taking banks to trial.  The reason trial is important is far reaching.  First, trials are public, and the public will be able to hear testimony on what the banks have actually done.  Second, settlements allow the bank to settle for a fraction of their profit, and offer no incentive to abide by the law.  Finally, a settlement looks like someone is actually going after the banks.  But if that were the case, why are we still fighting them?

There is a case going on in Federal Court in Massachusetts titled “IN RE BANK OF AMERICA HOME AFFORDABLE MODIFICATION PROGRAM (HAMP) CONTRACT LITIGATION”.  This case affects more people than those in Massachusetts though as it is a federal class action which involves people from many different states, including Florida.  Long story short, Congress passed the HAMP Program to help homeowners obtain loan modifications.  Bank of America (“BOA”) received 45 billion dollars in government bail-out money in 2009, which required them to participate in the HAMP program.  So they collected the money, but did they participate in the program?

Although the case has not been to trial, testimony has been presented and given.  Declarations have been filed by employees of BOA that paint a horrific scene when it comes to how BOA carried out its HAMP responsibilities.  BOA has asked the Court to seal the depositions taken, and the Court has granted their motion.  As bad as the declarations are, I can only imagine what the depositions might say, and why BOA would want them hidden from public view.

The picture these employees paint is not pretty, and it portrays an entity that will thumb its nose at the very government that gave it billions of dollars, while violating the very Consent Order, Consent Judgment, and National Mortgage Settlement that this very government is holding over its head, yet somehow is not holding its feet to the fire on.  Why BOA is committing these actions is one question.  Why they are not facing accountability by that very government is another.  Attorney General Holder’s comments about “too big to fail” and the fact that prosecuting the big fish could hurt the economy notwithstanding; the issue is more complex.  A program was passed to help homeowners, and given to an entity whom has consistently harmed them.  Without enforcement and regulation, the old dog was not going to learn new tricks.

BOA not only lied to and damaged countless homeowners, but lied to the very government that bailed them out through their HAMP reporting.  They harmed taxpayers, homeowners, their own employees, and created damages we may never be able to truly calculate nationwide.  They will eventually weaken confidence in our economy through their actions which will now become known (again the opposite of what Holder what trying to achieve by his comments).  They will weaken confidence in government officials who won’t hold them accountable.

Here’s a gist of what took place, all from employees of BOA.  Only portions are provided due to length, and I am not providing the names on the affidavits:

A CUSTOMER SERVICE REPRESENTATIVE:

“Bank of America’s practice is to string homeowners along with no apparent intention of providing the permanent loan modifications it promises.  The processes Bank of America uses, and the instructions it gives its employees, appear to be designed to avoid modifying mortgage loans.  I was instructed to inform every homeowner who called in that their file was “under review—even where the computer system showed that the file had not been accessed in months or when the homeowner had been rejected for a modification.  My co-workers and I were instructed to tell homeowners that modification documents were not received on time or not received at all when, in fact, all documents were received on time.  We were also instructed to tell homeowners that documents were sent on a particular date, when they had not been sent at all.”

During my time at Bank of America, I saw well over a hundred cases in which a Bank of America “analyst” cancelled loan modifications and stated non payment as reason for the cancellation when it was apparent from the computer system that the homeowner had actually made all the required payments.  There was nothing on the computer system to suggest that the analyst’s cancellation was anything but arbitrary.  During my time at Bank of America, I saw records regarding hundreds of homeowners that Bank of America treated dishonestly.  These homeowners were eligible for loan modifications under HAMP, sent back all the required documents and made all their required payments under a trial plan.  Bank of America nevertheless damaged their credit ratings by reporting them delinquent, tacked on additional charges to their loans, increased the amounts it considered as being owed, and often referred these homeowners to foreclosure.” 

CASE MANAGEMENT TEAM MEMBER (PROMOTED FROM UNDERWRITER):

“Bank of America employed a common strategy of delaying HAMP applications.  Delay was achieved using tactics including claiming that documents were incomplete or missing when they were not, or simply claiming the file was “under review” when it was not.  We were instructed to delay and then push homeowners to accept an internal refinance so that Bank of America would profit.  Once an applicant was finally rejected after a long delay, the bank would offer them an in-house alternative.  Bank of America would charge a higher interest rate, ranging up to 5%, as compared to the 2% if the loan had been modified under HAMP.  The unfortunate truth is that many and possibly most of these people were entitled to a HAMP loan modification, but had little choice but to accept a more expensive and less favorable in-house modification.”

“Upon joining the newly formed Case Management Department, I began to experience what Bank of America termed a “blitz”.  Approximately twice a month, Bank of America would order that case managers and underwriters “clean out” the backlog of HAMP applications by denying any file in which the financial documents were more than 60 days old.  These included files in which the homeowner had provided all required financial documents and fully complied with the terms of a Trial Period Plan.”

“During a blitz, a single team would decline between 600 and 1,500 modification files at a time for no reason other than that the documents were more than 60 days old.  Bank of America instructed its CRMs, underwriters and other employees to enter a reason that would justify declining the modification to the Treasury Department.  Justifications commonly included claiming that the homeowner had failed to return requested documents or had failed to make payments.  In reality, these justifications were untrue.  I personally reviewed hundreds of files in which the computer systems showed that the homeowner had fulfilled a Trial Period Plan and was entitled to a permanent loan modification, but was nevertheless declined for a permanent modification during a blitz.

“On many occasions, homeowners who did not receive the permanent modification that they were entitled to, ultimately lost their homes to foreclosure.”

“Employees who challenged or questioned the ethics of Bank of America’s practice of declining modifications for false and fraudulent reasons were often fired.  There was an extremely high level of turnover in every HAMP related Bank of America department that I saw.  Employees worked in fear of losing their jobs if they called any of Bank of America’s practices into question.”

SENIOR COLLECTOR OF LOSS MITIGATION/MORTGAGE:

“Beginning in 2009, I regularly spoke to people who had received HAMP Trial Period Plans, made their trial payments, and who were calling to inquire about the status of their expected permanent loan modification.  Using the Bank of America computer systems I saw that hundreds of customers had made their required trial payments, sent the documents requested of them, but had not received permanent modifications.  I also saw records showing that Bank of America employees had told people that documents had not been received when, in fact, the computer system showed that Bank of America had received the documents.  This was consistent with the instructions my colleagues and I were given.  We were told to lie to customers and claim that Bank of America had not received documents it had requested, and that it had not received trial payments (when in fact it had).  We were told that admitting that the Bank received documents would “open up 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 underwriting staff to complete the underwriting in that time.” 

“My colleagues and I were supervised by “Team Leaders” who were, in turn, supervised by “Site Leaders.”  Site leaders regularly told us that the more we delayed the HAMP modification process, the more fees Bank of America would collect.  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.  For example, we were instructed by our supervisors at Bank of America to delay modifications by telling homeowners who called in that their documents were “under review,” when, in fact, there had been no review or any other work done on the file.”

“Bank of America Site Leaders specifically ordered my colleagues and me to hold financial documents borrowers submitted for at least thirty days.  Once thirty days passed, Bank of America would consider many of these documents, such as pay stubs or bank statements to be “stale” and the homeowner would have to re-apply for a modification.”

“These and other similar instructions often came in monthly meetings that were conducted by Site Leaders and attended by 60-70 employees.  At these meetings, my colleagues and I were also given performance “goals” and quotas.  Employees were rewarded by meeting a quota of placing a specific number of accounts into foreclosure, including accounts in which the borrower fulfilled a HAMP Trial Period Plan.  For example, a Collector who placed ten or more accounts into foreclosure in a given month 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.” 

Bank of America Collectors and other employees who did not meet their quotas by not placing a sufficient number of accounts into foreclosure each month were subject to termination.  Several of my colleagues were terminated on that basis.”

“Bank of America monitored my colleagues and me very closely.  Team Leaders and Site Leaders walked the call room floor throughout the day wearing headsets that they would use to plug in and listen into a call without warning.  Employees who were caught not carrying out the delay strategies that Bank of America instructed were subject to discipline including termination.  Employees who were caught admitting that Bank of America had received financial documents or that the borrower was actually entitled to a permanent loan modification were disciplined and often terminated without warning.” 

A “COLLECTOR”:

“Based on what I observed, Bank of America was trying to prevent as many homeowners as possible from obtaining permanent HAMP loan modifications while leading the public and the government to believe that it was making efforts to comply with HAMP.  It was well known among managers and many employees that the overriding goal was to extend as few HAMP loan modifications to homeowners as possible.”

“My colleagues and I were called into group meetings with our supervisors on a regular basis.  The information we received in group meetings showed me that Bank of America’s deliberate practice was to string homeowners along with no intention of providing permanent modifications.  We were instructed to inform every homeowner who called in that their file was “under review”—even where the computer system showed that the file had not been accessed in months or when the homeowner had been rejected for a modification.” 

“My colleagues and I were instructed to inform homeowners that modification documents were not received on time, not received at all, or that documents were missing, even when, in fact, all documents were received in full and on time.”

“One tactic Bank of America used to delay the modification process involved telling homeowners who applied for a HAMP modification or who were in a Trial Period Plan to resubmit financial information each time they called to inquire about a pending modification.  Bank of America then treated any change in financial information as justification for considering the homeowner to have restarted the HAMP process.  Even a small change to financial information or correcting an error that Bank of America made will cause Bank of America to restate the application process under the pretext of changed financial information.” 

When Bank of America purchased loans from other servicers, including when it bought the servicer itself—as it did with Wilshire Credit, Bank of America 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 the payments the homeowners 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.” 

“When an account or attempted modification was considered “closed” it meant that the homeowner would not be receiving a modification and would often be facing collections or foreclosure.  The production goals Bank of America placed on its managers were based on how many accounts they could “close”—meaning how many homeowners they could reject for the loan modifications rather than how many modifications they could successfully complete.  Managers received bonuses if their teams met or exceeded production goals.” 

“Managers, in turn, pushed their production goals on the loan level employees.  Employees were awarded incentives such as $25 in cash, or as a restaurant gift card based on the number of accounts they could close in a given day or week—meaning how many applications for loan modifications they could decline.” 

“I personally witnessed employees and managers close loan accounts based on information that was obviously wrong.  This included closing accounts, and declining loan modification based on the homeowner’s failure to provide certain documents or information when, in fact, it was apparent from the loan file and from the electronic system of record (electronic databases including AS400, HomeSaver, HomeBase, and others) that the homeowner had provided the very information claimed to be missing.” 

“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.  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.  This was done so that the file could be closed, the homeowner’s effort to obtain a loan modification could be rejected, and the manager could meet Bank of America’s production goal for the given week or month.”

 TEAM LEADER (PROMOTED FROM UNDERWRITER):

 I observed that Bank of America reported to the Treasury Department and made public statements regarding the volume of loans it was successfully modifying, and the efforts it was making to catch up with the volume.  Often this involved double counting loans that were in different stages of the modification process.  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.” 

 HOME RETENTION SPECIALIST: 

“I saw instances where Bank of America sent borrowers who were current on their permanent loan modifications foreclosure notices.  In some cases, where Bank of America did not update its system to implement the terms of a permanent modification, Bank of America foreclosed on homes of borrowers who were not delinquent on their permanent loan modification payments.” 

 “I was often instructed to give borrower misinformation about the status of a modification application.  I was told to tell borrowers that their applications were still under review even after a decision to grant or deny the application was already noted in the system.  I was also told to tell borrowers that their applications were incomplete because Bank of America did not have all the required documentation even when I could tell that all the documentation was in Bank of America’s system.”