Home > Foreclosure News > The Deliberate Default…What the BOA Declarations are Missing

The Deliberate Default…What the BOA Declarations are Missing

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.

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  1. al
    June 20, 2013 at 1:13 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:
    http://wiki.answers.com/Q/What_is_the_phone_number_of_Bank_of_America_corporate_offices_in_Charlotte_NC
    “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.”

  2. June 28, 2013 at 9:33 am

    so most of the cases of home defaults are just bank propaganda? They tend to give the home owner no other choice and then try to make it look that they are an angel for reconsidering.

  3. November 30, 2013 at 5:44 pm

    Hello! I’m at work browsing your blog from my new iphone!
    Just wanted to say I love reading through your blog and look forward to all your posts!
    Keep up the superb work!

  4. Cee Bee
    January 14, 2014 at 12:30 pm

    I am a victim of this vicious practice. In the last 5 years my mortgage has been sold 7 times! During sell number 3 or 4 our escrow account was “lost”. We have never missed a payment or had a change in our taxes etc. We have even hired two lawyers who at first were very anxious to help us but then quit because they felt the fight with “large company would cost more money and time than they had”. Our lawyers and I have sent dozens of letters to Bayview to ask where this “shortfall” occurred and to send the appropriate documentation to us and/or our lawyer. THey have failed to do so. They will only send our payment history and have altered that history to show us not making “full” payments. We have paid in full each month but they want us to pay about $1,800 dollars for this escrow shortfall and will shorten our mortagag each month to cover this bogus charge. They have messed up my credit by making all my payments as late because I won’t pay them this 1,800(and this price changes drastically each month). HOw is this allowed to happen? If I pay this amount and allow them to rob us, will this happen again? I feel lost and don’t know what to do. It’s a shame we live in a country where “big” companies can railroad small hardworking Americans into helping them obtain a LOT of extra and ILLEGAL money!

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