Home > Foreclosure News > The Buck Didn’t Stop There…What the BOA Declarations are Missing

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

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.

  1. jake
    June 18, 2013 at 3:46 pm

    they want to foreclose because there is no loan on the property…they already busted out the ‘investors’…they want new free and clear title…it is free property to them once they eliminate all previous title claims…modification presumes some previous title holders and lien holders…lol…foreclose eliminates ’em all…

  2. June 18, 2013 at 3:49 pm

    exactly Jake – foreclose on something you don’t even own and get paid again on top of insurance. And you get to hide the evidence.

  3. June 18, 2013 at 4:25 pm

    Isn’t this similar to “check kiting”?

  4. June 18, 2013 at 4:51 pm

    way too similar. Scary isn’t it?

  5. al
    June 20, 2013 at 1:14 pm

    I don’t disagree at all with your position vis a vis BOA’s commission of fraud upon it’s mortgage customers facing foreclosure.
    However, I would like to alert you and your readers to the OPPOSITE situation whereby they FAIL to protect the integrity of neighborhoods by REFUSING TO TAKE OTHERWISE LEGITIMATE FORECLOSURE ACTION THEREBY PROTECTING NEIGHBORING PROPERTY OWNERS AND THEIR OWN SHAREHOLDERS!
    The following is the essence of an email (names/locale removed) sent to BOA “customer relations” folks identified in this wiki post:
    “The reason for this email is to express the consummate frustration that we have been experiencing for one year now as a result of your bank’s consistent refusal to proceed with an entirely warranted and justified foreclosure of a home. We just completed a call to the law firm representing your bank after noticing that this property suddenly disappeared from their list of properties to be auctioned.

    Noticing that these debtors had returned to this property in July 2012, after leaving it a year earlier, we called both the local police, searched county records, and obtained whatever information available regarding this property’s status.

    It is clear that the buyers of this home fell delinquent in their mortgage payments sometime in 2010 and, in 2011, left the home completely. Having owned our home for 12 years as a part-time resident who visits often, we noted the increasingly poor condition of this home and its unkempt yard. Clearly, these are residents who cannot, or will not, respect either their legal/financial obligations or the integrity of the neighboring properties.

    These residents returned in the heat of the summer of 2012 without ensuring that the premises had running water or air conditioning. If not for our efforts with local and state officials where we advocated that they cite this home as uninhabitable, the returning residents would not have paid an outstanding water bill and provided running water to the home. They were using pool water, which had not been filtered/treated for at least a year, to flush their toilets. Because of a serious mosquito problem in the area, the Town had to treat the community with pesticides. We were concerned that the untreated pool was a potential health hazard for West Nile virus and alerted the County accordingly.

    We became aware that BOA secured the winterization of this home in 2011 after the default of these property owners on their mortgage. This action must have been taken to protect what the BOA viewed as their legal ownership of these premises. Why then, after the property was vacated by the property owners of record, does BOA continue to treat the occupants as the legal owners?
    We are also aware of BOA’s forgiveness of the second, or subordinate, loan that it made to this property owner in the amount of approximately $100,000. As the total amount loaned to these delinquent debtors totaled roughly the sales price, we estimate that at least $500,000.00 remains due BOA. Considering the interest that has accumulated in the ensuing three years, we imagine that a good deal more is left owing.

    Due to the significant fall in home values, and especially in light of the deplorable condition in which this home now finds itself, its market value would approximate one half of the outstanding loan amount.

    It is clear to us, now more familiar with the “main breadwinners” work record that he appears to have great difficulty finding work and lost his job with the BOA shortly after purchasing this home. His attempts to support a family of five on whatever limited employment is available to him in this remote, seasonal area seem inadequate.

    BOA’s hopes of ever securing any responsible payment of the amounts owed it are slim, if they exist at all; and this latest report we received of an attempt to “work out” the loan is ludicrous, if not exceptionally and personally damaging to us as neighbors in this unfortunate situation.

    Additionally, the eldest daughter in this family is in frequent trouble with local law enforcement and is, in fact, in court today answering two drug-related charges.

    It is clearly false economy for the BOA to believe that the correct remedy for this problem is to wait for an epiphany that will turn these debtors into responsible borrowers or good neighbors. A better approach would be to conduct the auction of this property as scheduled and allow a competent borrower to purchase and rehabilitate the same. We certainly feel that BOA stockholders would appreciate this latter approach as well.
    It is perplexing, too, why some hard-working individuals trying to care for and support their homes in this and other communities and who truly suffered hardships for which they were not responsible, were displaced from their homes by BOA in short periods of time and without the same opportunities granted these homeowners. We’re sure these BOA customers would appreciate an explanation for the disparate treatment evidenced here.”

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