After three years of hand-to-hand combat with Bank of America over his home loan, Daniel Casper was more than ready to call in a neutral referee. So in January, the Illinois wedding videographer applied to the Independent Foreclosure Review, a program overseen by banking regulators that offers compensation to homeowners who show they were harmed by a mishandled foreclosure.
But last week, after his application was shot down -- possibly by the bank itself -- Casper found himself stuck back in a familiar place: trying to get answers from a company offering shifting explanations for why his appeal for help was rejected.
"I can't believe I'm still doing this," Casper said after spending several days on the phone with Promontory Financial Group, the financial services company Bank of America hired to review the loans. "I was stunned because I sent 45 pages of documents that prove I qualify," he said.
Since the housing market crashed in 2007, thousands of foreclosed homeowners have complained that their mortgage company made a mistake in the management of their home loan, such as foreclosing on someone making payments on a loan modification plan. The Independent Foreclosure Review, which came out of a legal agreement between 14 mortgage companies and bank regulators over these abusive "servicing" practices, was supposed to give these homeowners an opportunity to have an unbiased third party review their foreclosure and determine if they might qualify for a cash payout of up to $125,000.
Those reviews are still ongoing, but recent reports suggest the process is not as independent as homeowners may have hoped. ProPublica, an investigative nonprofit, reported last week that Bank of America and other large banks are doing much of the review work in-house and may even be making recommendations about their own financial liability.
Casper's rejection letter, though vague in details, seems to suggest that in at least one instance, the worst-case scenario may have played out: the bank rejected a homeowner's application and the company hired to review those decisions didn't double-check whether that rejection was appropriate.
"Bank of America's records indicate that your mortgage was not in the foreclosure process during the eligible review period" of 2009 and 2010, his rejection letter says. Casper provided the Huffington Post with supporting documents that show his foreclosure was filed during the proper time frame, in Sept. 2009.
In a statement, Bank of America said that Promontory administers the review program without interference.
"Promontory designed the testing approach, developed the test questions, performs case reviews in both the file review and claim review processes, makes all determinations of harm and financial injury and determines all remediation recommendations," the statement said. "Promontory's analysis is the sole and final basis for outcomes in the [foreclosure review]."
A spokesman for the Office of the Comptroller of the Currency, which oversees the review program, said that the regulator "expects the independent consultants to exercise their independence in reviewing and evaluating" each loan. "Our examiners are ensuring that occurs," the spokesman said.
The foreclosure review program has been dogged by suspicions from the start that it is independent in name, but not in practice.
Many companies hired to review the loans, including Promontory and Treliant Risk Advisors, were professional firms that directly serve the mortgage companies for other consulting assignments. Francine McKenna, a columnist for American Banker and a former auditor, wrote last year that the setup presents an "almost untenable conflict of interest."
The review program also faced skepticism from many homeowners, some of whom told The Huffington Post earlier this year that they doubted whether federal regulators who had ignored their complaints about mortgage company abuses for years would do a better job overseeing this deal.
That skepticism may help explain the low application rates. The government estimated that 4.4 million borrowers were eligible for the program, but as of Oct. 23, just 243,000 had applied, according to a spokesman at the Office of the Comptroller of the Currency.
ProPublica's recent reporting is potentially the most damning. The stories, built on emails, employee interviews and contracts, suggest that the biggest participants -- Bank of America, Wells Fargo, Citigroup and JPMorgan Chase -- appear to be conducting much of the review work themselves. Though the consultants make the final call on whether compensation is deserved and how much should be paid out, banks can appeal these decisions. One current Bank of America employee reportedly said that the consultants simply double-checked the bank's work.
The Huffington Post recently spoke with a Bank of America employee in Florida who supported this contention. The worker, who asked not to be named for fear of losing her job, said she left the housing counseling world for better pay at one of the centers BofA set up to review the applications. She said claims were being handled properly, but acknowledged that the setup could be a conflict of interest.
For Casper, the process of straightening out the apparent error with his review feels all too familiar. He has applied for a government-sponsored mortgage modification through Bank of America several times over the past few years, he said. But each time, the bank refused to convert his trial loan into a permanent modification, he said. Casper is now in a standoff: He is severely delinquent on his payments, but refuses to accept any offer that does not include a reduction in his principal. Casper also refuses to accept yet another trial program.
Casper's account could not be independently verified, but thousands of other homeowners have alleged a similar pattern of misconduct by their mortgage company. According to one recent academic study, 800,000 families were rejected improperly or booted from the government's primary homeowner relief option, the Home Affordable Modification Program, or HAMP, as a result of errors or misconduct on the part of mortgage companies.
Many of these borrowers describe a nightmarish cycle of unreturned phone calls, lost documents and long conversations with bank representatives that aren't empowered to solve any problems. It's only been a few days, but Casper said his quest to find answers for why his application was rejected has started out in the same manner.
Casper said he called a number included in his letter for the Independent Foreclosure Review. He reached a representative who directed him to Promontory, which reviewed his loan, he said. Casper said he then had to look the company up on the internet and call a main line.
The homeowner said he has talked to five different Promontory employees in the last few days, and has had to start his story from scratch with each one. On Friday, he said he was told to check back in five to seven days.
Promontory did not respond to a request for comment.
Casper said he understands that mistakes are possible in any process. But he maintains that any truly independent auditor would have looked at the document he submitted along with his application, which would have shown that the bank's conclusion was inappropriate.
He said he cannot believe that the same banks that have paid billions of dollars in legal penalties because of their poor treatment of homeowners could be trusted to review their own loans, in any capacity.
"It's like asking Al Qaeda to look into 9/11," he said.