Anyone who worked with homeowners seeking mortgage modifications over the past years has made or heard some joke about the supposedly “lost” documents that their clients had to resubmit over and over. We're going to find closets and closets stuffed with lost faxes, they would say. Yeah right, they can't possibly so consistently misplace so many documents.
Others tried to point out that, even though it was their own damn fault that it was happening, the banks were nonetheless still unprepared for the onslaught as well, and didn't have the systems in place to handle it.
Well, just because you're paranoid doesn't mean people aren't out to get you. Several brave whistleblowers, from different parts of the country, who didn't work together, have added affidavits to a civil lawsuit against Bank of America that paint a stark picture not of chaos and ineptitude, but of systemic, intentional undermining of the modification process:
From Salon's David Dayen:
Employees, many of whom allege they were given no basic training on how to even use HAMP, were instructed to tell borrowers that documents were incomplete or missing when they were not, or that the file was “under review” when it hadn’t been accessed in months. Former loan-level representative Simone Gordon says flat-out in her affidavit that “we were told to lie to customers” about the receipt of documents and trial payments. She added that the bank would hold financial documents borrowers submitted for review for at least 30 days. “Once thirty days passed, Bank of America would consider many of these documents to be ‘stale’ and the homeowner would have to re-apply for a modification,” Gordon writes. Theresa Terrelonge, another ex-employee, said that the company would consistently tell homeowners to resubmit information, restarting the clock on the HAMP process.
Worse than this, Bank of America would simply throw out documents on a consistent basis. Former case management supervisor William Wilson alleged that, during bimonthly sessions called the “blitz,” case managers and underwriters would simply deny any file with financial documents that were more than 60 days old. “During a blitz, a single team would decline between 600 and 1,500 modification files at a time,” Wilson wrote. “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.”
Dayen concludes that if we still had anything like a fair rule of law in this country, this would lead to criminal charges against the bank. I have to agree. (I doubt that Bank of America was all that unique in how it behaved here. But if that's where we have evidence, start there. It's still criminal.)
Instead, we had a trial where Jeff Olson, a protestor who wrote anti-bank slogans in water soluable chalk on public sidewalks in front of Bank of America branches faced 13 years in jail and $13,000 in fines. Oh, and the judge told his lawyer he wasn't allowed to use free speech as a defense. Hello?
Thank goodness the jury saw through the insanity and found him not guilty of vandalism (since when do you get more jail time for vandalism than for, say, rape, anyway?).
At the National Housing Conference Policy Symposium on June 21, just a few days after the whistleblowers' allegations were made public, HUD Secretary Shaun Donovan, after praising the National Mortgage Settlement and saying that their investigation had found that some abusive practices, like robosigning, had stopped, said:
Unfortunately, other harmful practices endure. Most notably, the compliance report shows that four of the five banks consistently fail to send notices and communicate decisions to homeowners in a timely manner.
This is unacceptable. That’s why, earlier this week, I took to the airwaves to send a simple message to these banks: that it is time for them to live up to their end of the deal by complying with all aspects of the Settlement.
If they don’t, we will work with our partners at the state level to explore all options to remedy this situation, from fining them for each failure, to hauling them back into court.
And I assured them that our commitment to this cause is unshakable. The homeowners who experienced servicing abuse deserve justice. And we won’t stop till they get it, and until banks reform their abusive practices, once and for all.
Nice words. Will they be acted upon?
Since the affidavits in the BOA case say the practices continued at least 6 months after the settlement was agreed to, they are not just a matter of violating the settlement—they are new allegations of new criminal acts. Also, lying and shredding documents and denying modifications that homeowners qualify for is rather a bigger deal than not sending notices on time.
Let's hope Secretary Donovan lives up to his word, and that his counterparts at the regulatory agencies find the courage they have so far lacked to head to trial and show us that the rule of law is not actually dead in the US of A.
(Photo by mike3k, CC BY-NC-ND.)