Posts Tagged ‘HAMP’

BOA Defeats Class Certification in HAMP Case…is it Over for Homeowners? Or Just Beginning?

September 5, 2013 3 comments

It’s no secret that eyes watching the foreclosure crisis have been watching the class action against Bank of America (BOA) in Massachusetts for some time now.  Today, the Court declined to certify the class, and what that means to us is not what many may think.

It does not mean that the Court ruled the homeowners claims are without merit.  It means that the Court said the homeowners claims do not meet the class action criteria.  Long story short the claims have to contain numerosity, commonality, typicality, and adequacy.  I used to practice in class actions and I can tell you the courts have gotten extremely stringent on what they allow to become certified class-wise.  Do I agree that the HAMP class didn’t meet the criteria?  No.  But these days it would take 22 sets of identical twins, all suffering the same injury at the same time by the same person under the same weather conditions to potentially meet it.  If one-half the sets of twins are under partly cloudy skies and the others under mostly cloudy skies then forget it.  That is how bad it has gotten.  And the famous Walmart case didn’t help things.

Class actions have their pros and cons always.  The upside is usually that people who cannot afford representation can be represented, the cases are massive and we obtain lots of information that we normally would not get from the other side.  The down side is if you are just part of a class you can end up with a lot less than you think.  I’ve been the associate calling people to tell them all they were getting was a magazine subscription for a year after they sued the company.  Not pretty.

But all hope is not lost.  What BOA has been relying on is that there is no private right of action for a homeowner to sue under HAMP, that HAMP was between them and the government, and the homeowner is not a third party beneficiary entitled to sue under it.  But that isn’t what the Court said, and basically we are left with a ruling that says the claims cannot be resolved as a class but can be resolved individually.

The Judge in the HAMP stated that the “Plaintiffs have plausibly alleged that Bank of America utterly failed to administer its HAMP modifications in a timely and efficient way; that in many cases it lost documents, or pretended it had not received them, or arbitrarily denied permanent modifications…Plaintiffs’ claims may well be meritorious….”

So before BOA gets too excited, I’d think long and hard about that.  Individual cases before juries?  Some with punitive damage claims?  Ouch.  Jurors are often more than ready to teach a big corporation a lesson.  Imagine tens of thousands of those cases.  I’m seeing more and more every day.

I think it is safe to say we have all learned a lot from this case.  From the BOA whistleblower affidavits to the Court’s ruling, the information will be used in courtrooms nationwide.  We’ve already seen Judges forcing modifications.  After how much money BOA took from the government and what their own employees state they did with that money while homeowners were suffering damages as a result, there is little doubt this has only just begun.


Modification Mess…and the Government’s Inaction

July 6, 2013 2 comments

It is common knowledge that now Bank of America’s own employees have stated the bank would have rather foreclosed or offered higher interest rate “in house” alternatives instead of modifying the loans under the Home Affordable Modification Program and directed them to make sure that goal was achieved.  Given that, would there be a light at the end of the tunnel?  Are the Congressional demands for investigation worth anything?

No.  The government knew that the servicers were engaged in egregious behavior.   As reported over and over again on March of 2013, before the Senate Judiciary Committee, Attorney General Holder stated “I am concerned that the size of some of these institutions becomes so large that it does become difficult to prosecute them … When we are hit with indications that if you do prosecute, if you do bring a criminal charge it will have a negative impact on the national economy, perhaps world economy, that is a function of the fact that some of these institutions have become too large. It has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate.”  The Home Affordable Modification Program (HAMP)’s own page administered by Fannie Mae, acknowledges that servicers told homeowners to stop payment.

When HAMP, once sold to homeowners as a promise of help was revamped, they had procedures in place to deal with homeowners who were told to stop making mortgage payments by the banks in order to qualify for a modification.  Combine that with the BOA affidavits which say there was never an intent to modify and the end result is thousands of foreclosure cases pending, with homeowners willing to pay their mortgages, who were prevented from doing so by the banks.  And to make it worse, they have been drug through years and years of modification attempts where their payments were not accepted, and the bank now has the audacity to come to court and ask for all the back payments they would not accept and attorney’s fees for the bank bringing a foreclosure.  That is the judgment the bank is asking for.  It is extortion at an extreme that is incredible.

One would think this is so horrific – “homeowners told to stop payment for a modification?” that even given the legislative and executive stance (or lack thereof) on the issue, that the judiciary would right this wrong.

Wrong.  The judiciary has consistently held that homeowners are not “third-party beneficiaries” under any of these agreements, new legislation, consent orders, judgments, etc.  Therefore, they have no right to raise the argument, and they have no right to a loan modification (although tort and contract law are still alive and well – just make sure you aren’t suing to get a modification).  So what was HAMP passed for exactly?

Given that when the program was revamped, the government knew of bank errors that were as huge as the “stop paying” deal, it appears HAMP was passed to do absolutely nothing.  The government will shell out billions – if not trillions – to banks pretending to consider files for HAMP, but they will do nothing when a bank accepts that money and doesn’t follow the rules.  The only thing the program managed to do is lure people into default, give them false hope, and make sure the foreclosure goes through.  Why would they not correct the errors of the banks already affected when they revamped the program?  Why wouldn’t they have made it known that thousands of homeowners were sitting in limbo on their home in Court all because a bank caused a default?

Go back to Holder’s comments.  The end result is too big, the end result is too much, the end result hurts the economy.  To truly prosecute them runs way beyond the HAMP scandal.  Were the banks considering loans that they even had authority to consider?  That they had the authority to modify?  Did the loan really belong to someone else?  Why are multiple lenders suing a single homeowner for foreclosure over the same loan?  How many foreclosure mediations were successful?  Mediation rules about the person being there required to have the authority to settle?  How often is Fannie or Freddie at a mediation?

The banks cutting corners all these years has created a mess that the government will not clean up, any willingness to do so stops every time they hear the word “Wall Street”.  So for everyone who has seen “A Civil Action” that remembers the fight John Travolta (playing Jan Schlichtmann) had on his hands that was ultimately lost, until the very end when the Environmental Protection Agency packet is delivered to Robert Duvall (as the Defense attorney for the corporation) and had that “ooooooooooohhhhh” moment.  That the “the government is going to help so it is not over” moment.  Don’t hold your breath this time.

Bank Induced Defaults….and What the Government Knew

July 3, 2013 20 comments

For so long, every time a homeowner was told “You need a modification.  However, we can’t help you get one because you are current on your payments.  You need to get behind payments to show us a hardship so we can modify your loan.” and the homeowner thought they were being considered for HAMP it was a lie.  HAMP didn’t require homeowners to miss payments.

From the HAMP page “Administrative Website for Servicers”, “Administered by Fannie Mae” there is a document called the “HAMP Resolution Matrix” apparently for servicers to follow.

In paragraph 26 it states:  “Homeowner Advised to Miss Payment (1) Confirm with homeowner (or homeowner advocate) that the property is the homeowner’s principal residence. (a) If no, explain that a homeowner can never be required to miss a payment however, under HAMP Tier 2 there is no risk of imminent default review when the mortgage loan is secured by a rental property. Explain the HAMP Tier 2 eligibility criteria and close case. (b) If yes, advise homeowner (or homeowner advocate) that they are NOT required to miss a payment. (Advise homeowner that they will be reviewed against imminent default criteria for principal residence.)(3) Obtain evidence that homeowner was advised to miss payment(s) including name and contact phone number of servicer’s representative.(4) Confirm with servicer. (a) If servicer acknowledges error, require servicer to communicate correct status to homeowner (or homeowner advocate). (b) If servicer denies allegation, communicate misunderstanding to homeowner (or homeowner advocate), discuss next required actions before closing case.”

How dare they?  “If servicer denies allegation communicate misunderstanding to homeowner…”?  Are you kidding?  Forcing a homeowner into default by misrepresenting the HAMP requirements and then dragging them through a fraudulent modification scheme to collect government funds and foreclose instead of modifying (as seen in the BOA affidavits) to profit.  And relying on the servicer to admit or deny it?  That is a “misunderstanding” to communicate to a homeowner?

NO – it is estoppel.  PERIOD.  And court decisions will show you that the court has the power to put homeowners in situations like this right back to where they were when the bank uttered those “stop payment” words.  If they are out arrearages and fees, it is their own doing.  Recently I encountered a case, not on “stop payment” grounds but on the grounds that the homeowner made the trial payments and the bank sent them back.  And the Judge didn’t like that so much, so the bank will answer for their own causing of arrearages and fees, along with sanctions and attorney’s fees because had it not been for their behavior the client would not have had to hire me.

Bank of America contracted out a lot of their HAMP work to third party vendors such as Urban Lending Solutions.  The problem?  They instructed the third party vendors on what to do to violate what they took government money to do.  Those vendors, along with Bank of America induced defaults, and then thwarted the modification process in a fraudulent scheme.   The employee affidavits show just as much.  Other banks did just the same, and the defaults were their own doing.

Let’s get real clear.  What this document labels a “misunderstanding” is no misunderstanding at all.  In law, we call it fraud.

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.  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.

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.

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:


“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.” 


“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.”


“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.” 


“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.”


 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.” 


“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.”