A lawsuit filed on behalf of homeowners who say they were forced into foreclosures and improperly denied loan modifications‚ per the terms of a multi-billion dollar government settlement‚ now has the backing of former Bank of America employees.
Our Los Angeles foreclosure defense attorneys understand that the allegations include explicit instructions to lie to customers about whether important paperwork had been received‚ rewards to employees who reached certain foreclosure quotas and denials of loan modification requests for no reason.
The lawsuit was filed recently in Massachusetts‚ and now includes the sworn statements of at least a half a dozen former Bank of America employees.
The loan modifications were to be extended to customers according to the Home Affordable Modification Program‚ or HAMP‚ which was founded by federal authorities following the 2008 collapse of the housing market. The idea was to give struggling homeowners options to help them hang onto their homes.
So if borrowers were able to meet certain criteria and followed through with trial payments‚ the company was supposed to consider them for a loan modification – particularly if that loan was deeply underwater‚ which would not have been the fault of the borrower in any case.
However‚ Bank of America‚ according to the lawsuit‚ was systematically denying the applications of borrowers for no legitimate reason. When pressed on why the modifications were denied‚ the bank would lie‚ according to former employees.
For example‚ one former employee reported that in her own personal experience‚ she could recall “well over 100” cases where a so-called analyst for the bank was called in to cancel a loan modification‚ with the stated reason of that cancellation listed as non-payment. This was despite the fact that all the forms in the computer system reflected that the borrower actually had made all the necessary payments. The system by which modifications were cancelled‚ the worker said‚ was completely arbitrary.
Employees would then falsely enter into the system that the borrower had failed to make a payment. Not only that‚ that false information would then be forwarded to credit reporting agencies‚ which would subsequently damage the homeowner’s credit worthiness.
That wasn’t even the worst of it. Twice every single month‚ the former workers say they were part of something known as a “blitz.” This was a designated period in which management instructed underwriters to take action to clear out backlogged loan modification applications by denying any that were older than two months. This was done even when homeowners had provided all necessary paperwork and complied with all express terms of the trial period.
This in turn would kick these applicants back to the beginning of the process – again‚ for no real reason.
The former workers also told of another disturbing practice‚ one that involved paying out bonuses and offering gifts to employees who shuffled the most loan modification applications into the foreclosure sector. Among the rewards offered were $500 in cash and gift cards to large home goods retailers. Workers who weren’t eager to do this? they were threatened with losing their jobs.
Additionally‚ workers were also encouraged to press in-house modifications. These modification plans were inevitably less favorable to the borrower. In some cases‚ it only lowered the loan amount by $7.
Of course‚ this isn’t the first time Bank of America has been sued for its mortgage practices. It paid $42 billion for its mortgage abuses between 2010 and 2012. And yet‚ as these accounts reveal‚ the firm seems to have learned very little.
If you are facing foreclosure in Los Angeles‚ contact Cal West Law to schedule your free consultation. Call (800) 568-0707.
Bank of America lied to distressed homeowners‚ former employees say‚ June 13‚ 2013‚ By Kimberly Miller‚ Palm Beach Post