According to a report in ProPublica this week, it was routine policy for Bank of America employees to lie to homeowners seeking loan modifications and deny their applications for reasons that were falsified — they even got rewarded for sending homeowners into foreclosure, according to sworn statements from former Bank of America employees.
The statements were filed last week in a Boston federal court. They were part of a multi-state class action suit brought on behalf of homeowners who sought to avoid foreclosure through the government’s Home Affordable Modification Program (HAMP) but say they had their cases botched by Bank of America.
A Bank of America spokesman said in a statement that the testimony of the former employees was “rife with factual inaccuracies” and that the bank will address the accusations in a more complete manner when the case goes to court.
In 2009, the Obama administration launched the Home Affordable Modification Program (HAMP) and Bank of America was by far the largest mortgage servicer in the program. The former employees say that in response to the huge influx of desperate homeowners, the bank often misled them and denied applications for completely bogus reasons.
Paul Kiel of ProPublica writes:
“Five of the former Bank of America employees stated that they were encouraged to mislead customers. ‘We were told to lie to customers and claim that Bank of America had not received documents it had requested,’ said Simone Gordon, who worked at the bank from 2007 until early 2012 as a senior collector. ‘We were told that admitting that the Bank received documents would open a can of worms,’ she said, since the bank was required to underwrite applications within 30 days of receiving documents and didn’t have adequate staff. Wilson said each underwriter commonly had 400 outstanding applications awaiting review.”
Adding to the deception, anxious homeowners who inquired about the status of their applications were often told that they were “under review,” when in fact, nothing at all had been done. Sometimes the “under review” excuse was given when the application had already been denied.
This is not the first time Bank of America has faced such allegations. In 2010, the states of Arizona and Nevada sued the bank for improper handling of modification applications. In 2012, the bank settled a lawsuit brought by a former employee of a contractor who charged that the bank was mishandling HAMP applications.
Leave a Reply