Revealing behavior reminiscent of the officious conduct of government clerks in Terry Gilliam's Brazil, in litigation against Bank of America, former employees have filed sworn statements that allege the bank routinely gave borrowers the administrative run-around, and then foreclosed on them without justification. These allegations confirm what advocates and consumers have been saying for years. They also strongly suggest that oversight of such practices has not been forceful enough to reform bank practices, and more--and more aggressive--attention to this conduct is necessary.From affidavits filed in litigation against the bank, some of the most serious charges include the following:
- Bank employees routinely lied to borrowers about whether their applications for mortgage modifications were complete and removed documents from the borrower's file to provide grounds for rejecting such applications.
- Bank employees would delay consideration of modification applications and then force borrowers to re-apply for a modification because their applications were deemed stale.
- Bank officials offered bounties to front line employees and their supervisors for meeting foreclosure quotas, regardless of the merits of the bank's claims.
- Bank employees routinely used deceptive tactics to steer borrowers away from modifications on favorable terms under the federal Home Affordable Modification Program (HAMP) and into agreements with terms that were far more beneficial to the bank.
- The bank lied to the federal government and the public about its loan modification performance.
- The bank would routinely purge backlogged modification applications and reject them without any basis for doing so.
- Employees who challenged these bank practices were fired.
When bank "robo-sign" activities came to light several years ago--that banks were falsifying court records in bids to foreclose on homes--many of the largest banks, including BofA, entered into a multi-billion dollar settlement in which they promised to clean up their act. These new revelations regarding this trail of misconduct strongly suggests that another, more aggressive round of oversight of bank practices may be in order, one that might not let the banks off so easily. What these allegations reveal is that the at least one bank--which until recently was the nation's largest mortgage servicer--appears to be thumbing its nose at the corrective action it agreed to take to remedy shoddy foreclosure practices. Can a bank that gets caught lying, and then potentially lies about whether it's still lying, truly be trusted?
Several states have taken, or signal that they plan to take, aggressive action against banks that appear to be violating the robo-sign agreement. While many of the allegations described above are from former employees and their affidavits fail to state whether they describe actions taken before the nationwide settlement or after, they certainly expose what appears to be a culture of deception within BofA, one that placed profits ahead of not just people, but the law. Such allegations of fraudulent conduct demand exacting review of BofA's performance under the nationwide settlement, and inquiry into whether other banks bound by its terms are flouting their responsibilities as well. Many of the nation's largest banks avoided civil and even criminal charges by entering into a nationwide settlement through which they agreed to reform their foreclosure practices. If this is what reformed behavior looks like, the Justice Department and the state attorneys general who negotiated the agreement may need to go back to the drawing board in their efforts to police foreclosure abuse.