Something has rippled through the surface as the storm of the government eavesdropping scandal rages: Bank of America has 'admitted' to illegal practices that negated relief of its distressed mortgagees and has paid incentives to those bank officials who expedited the highest numbers of foreclosure.
This practice is in net violation of both banking laws, and the relief program the Obama administration had put in place to help distressed borrowers, following the 2008 mortgage and banking fallout.
According to the site "Pro Publica" a civil and consumer rights watchdog group, Bank of America "employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure, according to sworn statements by former bank employees."
As the Pro Publica article details, there is a very big price to pay for letting wall street and banking institutions go unpunished for these kinds of violations.
Furthermore, the whistleblower who worked at BofA and who caused the investigation that uncovered the wrongdoing also added that "homeowners were simply denied en masse in a procedure called a 'blitz'......as part of the modification applications, homeowners were required to send in documents with their financial information. About twice a month, the whistleblower said, the bank ordered that all files with documentation 60 or more days old simply be denied. "during a blitz, a single team would decline between 600 and 1,500 modification files at a time."'
These details have emerged also because there is a civil litigation, a "consolidation of 29 separate lawsuits against the bank...seeking class action certification."
The whistleblower however, was not alone. Along with him 5 more BofA employees came forward: they held positions ranging from managerial to front line employee. All of them were involved in the distressed loan program.
Obama launched HAMP in 2009. The program was intended to offer relief to distressed homeowners. BofA was and still is the largest holder of mortgages in the program. And it had twice as many eligible distressed mortgagees as the next largest bank.
This type of practice, investigators believe, might also have been adopted at other large and smaller institutions.
Because the banks had an obligation under HAMP to underwrite application withing 30 days of receipt, the bank told employees to lie about receiving the necessary documents, even though the bank was holding them all along. Some of the employees cite the fact that there were not enough underwriters, since each of them might have had as many as 400 outstanding applications for relief to review at any given time.
What is more egregious however, is the fact that the bank rewarded those underwriters who had the highest amounts of foreclosures, i.e. the highest numbers of denial of relief, and were given monetary bonuses for their 'efforts'.
Although settlements in the past resulted in some money being given back to the borrowers, following the US attorney general's mandate to do so, most of the settlement give back a pittance and do not remedy the loss of the home that resulted from the denial of relief.
Source : Pro Publica/ 6.14.13
No comments:
Post a Comment