-Bank of America Accused of Stealing Homes
-Fighting Back Against Banks
-The Truth about HAMP Modifications
Today is July 4th and in thousands of communities, people will celebrate our independence with fireworks tonight. Independence from tyranny and a privileged ruling class. While we have gained our freedom from a then corrupt and tyrannical monarchy, many Americans are today beholden to a corrupt banking system.
On this day in 1826, an 83-year-old Thomas Jefferson penned a letter to the mayor of Washington DC. The letter was sent in response to an invitation for Jefferson to attend the 50th birthday of our great nation. By 1826, there were only three signers of the Declaration of Independence still alive. And like Jefferson, all were ill.
The prose of Jefferson is much different than writing styles of today. But there is much to be learned from Jefferson’s letter. That letter would turn out to be his last public letter.
This is what he wrote,
“all eyes are opened, or opening to the rights of man. the general spread of the light of science has already laid open to every view the palpable truth that the mass of mankind has not been born, with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately by the grace of god. these are grounds of hope for others. for ourselves let the annual return of this day, for ever refresh our recollections of these rights and an undiminished devotion to them.”
Jefferson was writing about the meaning of Independence Day and why it remained so important for our then young nation.
To Jefferson, Independence Day was more than our escape from British rule and our right to live in a democracy. It was also a much broader political statement. As Americans, we have rights. We weren’t born with “saddles on our backs” and have the right to not be beholden to a favored class.
Apparently big banks and Bank of America in particular, never read Jefferson’s writings. Today, millions of Americans suffer from economic tyranny. Although we have free elections, many still suffer with “saddles on their backs.” Those “saddles” are mortgages and policies designed to ensure that no one can ever escape the grasp of big banks.
On the eve of Independence Day, over 100 homeowners in central Florida sued Bank of America for trying to steal their homes. That’s right. Stealing. The allegations center around Bank of America’s less than stellar compliance with HAMP, a program designed to help struggling homeowners remain in their homes.
To best understand the lawsuit, some discussion of the HAMP program is necessary.
HAMP is short for the Home Affordable Modification Program. When the financial and real estate markets collapsed in 2008, the banks came running to Congress looking for a bailout. Taxpayers advanced hundreds of billions to the banks to keep liquidity in the financial system. One of the biggest recipients was Bank of America which received $45,000,000,000.00 from taxpayers. That’s right, $45 billion.
That wasn’t the only help given to Bank of America, either. Within months, the government had extended loan guarantees and purchased stock in the bank making a commitment of $300 billion! Congress was determined not to let Bank of America fail. Too bad Bank of America didn’t feel the same way about its customers.
Congress was there for the banks but in return, simply asked those banks to help struggling homeowners. Under the HAMP program, banks were supposed to help homeowners by lowering interest rates or stretching out payments. Often homeowners needed just a little help until they could find new employment.
HAMP wasn’t too much to ask considering that banks were the cause of the subprime lending mess and had themselves asked for billions and billions of dollars of bailout monies.
Bank of America and HAMP
Anyone who has tried to go through the loan modification process knows how it difficult it can be. We have heard from dozens of homeowners that have been required to send in their application materials dozens of times. Of incomprehensible runarounds. Of unanswered phone calls. Of “dual tracking” where one side of the bank says your trial modification plan has been accepted while a different division of the bank continues to send foreclosure notices.
One of the worst offenders (in our humble opinion) is Bank of America.
Happily, we can report that dozens of homeowners have joined together to sue Bank of America. Individual homeowners can’t afford to take on the banking Goliath. (Remember, by definition, homeowners seeking to modify their mortgage are having financial troubles. These aren’t the folks that can spend millions of dollars in legal fees fighting a giant bank.)
The action against Bank of America is a mass joinder action. It isn’t 100 single homeowners suing the bank in 100 separate lawsuits nor is it a class action. (More on “class actions” below.) Instead, it is a hybrid where a group of homeowners ban together and bring multiple claims against the bank but all in one lawsuit.
Knowing that Congress expected the banks to comply with HAMP, Bank of America signed a Servicer Participation Agreement with the government in April 2009. Under that agreement, the bank was required to make “reasonable efforts” to modify mortgages for qualifying homeowners.
Qualifying for HAMP Mortgage Modification Relief
To qualify for HAMP, one’s home must be occupied and not condemned. If you had not abandoned your home, you might be eligible for help.
The other requirements included a cap on the value of the outstanding mortgage ($739,750) and a demonstrable financial hardship. Congress didn’t want to bailout millionaires nor were they interested in helping folks who didn’t need help.
The only other requirement was the ability to pay. If you had an expensive mortgage and no income whatsoever, you didn’t qualify.
Once you qualified, homeowners were placed in a three-month trial program. Make your new, reduced payments on time and after 90 days the modification became permanent.
Sounds reasonable and relatively easy, correct?
For many “too big to fail” banks, the program was given nothing more than lip service. The banks wanted their bailout monies but had no intention of doing any heavy lifting to help homeowners.
Why didn’t they help? Because it would cost them money. (It didn’t seem to matter that Congress had given the banks hundreds of billions of dollars.)
The Bank of America HAMP Lawsuit
According to the lawsuit, Bank of America did nothing more than pay lip service to HAMP. They pushed through just enough loans to make it look like they complied with the servicer agreement they made with Uncle Sam. In our opinion, they were anything but complying.
“[I]nstead of honoring its contract with the Federal Government to, in good faith, help as many distressed homeowners as possible, it made a calculated decision. BOA decided to permit just enough HAMP modifications to occur to create a defense (however untenable) against Federal Government agencies, Congressional skeptics and the public that it was making best efforts to comply with its Agreement. Simultaneously, however, BOA chose to develop methodical business practices designed to intentionally prevent scores of eligible homeowners from becoming eligible or staying eligible for a permanent HAMP modification.”
How did the bank fail in their compliance obligations? Let’s count the ways!
Bank of America Improperly Staffs Their HAMP Program
A HAMP modification involves a lot of paper. Bank account statements, tax returns, applications and employment verifications. That requires a trained staff to quickly process those applications and insure homeowners are eligible.
Instead of hiring trained workers to handle these applications, we believe that Bank of America simply outsourced the project to a low bidder, Urban Lending Solutions. I interviewed one contract worker who told me she was given virtually no training. Despite having a learning disability, she was simply thrown into a work pool and told not to worry about the quality of her work! (A worker at another large mortgage servicer tells us the mail tables were located next to a giant industrial shredder. If you had too much paper to process, just shred what you don’t have time to open!)
Bank of America’s outsourced HAMP processing efforts were a sham. To an outsider, it looked as if the bank was spending millions of dollars and had hired hundreds of people to process loan modifications. As several insiders tell us, however, the HAMP programs of several big banks were nothing more than a black hole.
Bank of America’s Black Hole
The term “black hole” was first coined by astrophysicists. It is a region of space where gravitational forces are so intense that no matter or energy can escape. Not even light can escape from a black hole. In modern times, the term is used to describe a place where people or things disappear without a trace. In the case of Bank of America’s HAMP program, homeowners say that they would repeatedly send in the same documents only for them to disappear without a trace.
It didn’t matter if they were sent certified mail with a delivery receipt, the bank would claim they were never received.
One honest former Bank of America employee testified that the bank would claim that documents were missing or incomplete when they were not. The bank would also falsely claim that HAMP modification was “under review” when they were not.
As we long ago discovered at other banks, customer documents would be routinely shredded instead of reviewed.
Former BoA employee Rodrigo Heinle says that under instruction from management, “I deleted thousands of homeowner HAMP application files from Bank of America computer databases, as many as six thousand (6,000) in one day.”
Another former bank employee, William Wilson, Jr, said that the bank would sit on completed modification packages for months. Even though the customer had made all required trial payments and sent in their paperwork, the bank would simply delay. Then, periodically the bank would order a “blitz” in which workers were told to purge files because the documents were too old.
“During a blitz, a single team would decline between 600 and 1,500 modification files at a time for no reason other than that the documents were more than 60 days old. BOA instructed its employees to enter into its computer systems a reason that would justify declining the modification to the Treasury Department. The justifications commonly included claiming that the homeowner had failed to return requested documents or had failed to make payments. In reality, these justifications were untrue. [H]omeowners who did not receive the permanent HAMP modification they were entitled to, ultimately lost their homes to foreclosure.”
Perhaps the most damning evidence comes from another former bank employee, a senior collections worker. Simone Gordon says,
“Employees were given quotas for placing a specific number of accounts into foreclosure, including accounts in which the borrower fulfilled a HAMP Trial Period Plan. Employees who met quotas for placing “ten or more accounts into foreclosure in a given month received a $500 bonus. Bank of America also gave employees gift cards to retail stores like Target or Bed Bath and Beyond as rewards for placing accounts into foreclosure.
“Employees who were caught admitting that BOA had received financial documents or that the borrower was actually entitled to a permanent loan modification were disciplined and often terminated without warning.”
How can homeowners possibly win in a system so rigged? They can’t!
Fighting Bank Against Bank of America and Other Tyrants
The tide is slowly turning against big banks. Once dubbed “too big to fail,” we call them “too big to care.” The individual collectors and loss mitigation workers at these banks aren’t the problem. The blame falls squarely on the shoulders of senior management.
The modification units were understaffed, workers were underpaid and lacked training and often computer systems within the bank were designed so that workers couldn’t effectively see what was going on or speak to one another. Worse, the banks were pushing people into foreclosure as a matter of policy.
Because most residential loans are backed by the federal government, Fannie Mae or Freddie Mac, the banks simply don’t care if you lose your home to foreclosure. The investors in the notes (not the homeowners) are protected by the government loan guaranties.
Modifications cost the banks money, foreclosures don’t. That is the truth that explains why banks have acted with such malice towards homeowners. It’s greed, pure and simple.
Notwithstanding that banks took hundreds of billions of taxpayers’ monies and in return promised to help homeowners, the banks simply wanted the bailout monies. Had Uncle Sam tied executive salaries and bonuses to the number of successful HAMP modifications, we wouldn’t be seeing this lawsuit.
On this Independence Day, it’s time to remember that sometimes we need to fight for our freedom. It doesn’t always come easily. In Africa, the Korean peninsula and the Middle East, thousands of our military men and women are standing guard today. They stand guard to prevent radical terrorists and tyrants from spreading their hatred to our shores. It’s up to us to fight the tyrants already here. The privileged class as Thomas Jefferson would call them.
I started this post with a story about Thomas Jefferson and his thoughts on America’s 50th birthday. Jefferson was a visionary when it came to banks and bankers. Long, long ago in the 1700’s Jefferson warned us about the unchecked power of banks. In one of his greatest quotes, Jefferson said,
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around(these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”
So exactly how do we fight back?
First, if you are a homeowner actively fighting foreclosure, figure out a way to bring a counterclaim against your lender or loan servicer. In most states, a foreclosure proceeding is held without a jury. The judges that hear these cases have very little latitude. If you didn’t pay timely, the noteholder (the investor who owns your mortgage) has the right to foreclose.
By suing the bank and/or servicer, they now have skin in the game. Those suits also often earn you a right to a jury trial. If there is one thing we have learned, juries don’t have sympathy for banks these days.
Second, consider working with a class action law firm. Bringing class actions against banks for foreclosure abuses is difficult. The difficulty isn’t because the banks have access to unlimited litigation funds or armies of lawyers. Federal class action rules make it hard to create a class unless every member of the class suffered similar injuries.
Often we can create a mass joinder case like the current case against Bank of America. There is safety in numbers whether in a class action or a mass joinder action. Individual foreclosure defense lawyers, even the great ones, find it difficult to finance individual cases. With a group, the costs become more manageable.
Third, visit our Home Foreclosure Defense – the Guerilla Edition post. It contains many great ideas.
Finally, send a link to this post to your friends and colleagues who may be having their own problems with foreclosures. Banks are like tyrants, they don’t want you to know their dirty secrets. By shining a light on their tactics and demanding that elected officials and bank regulators take action, change can occur.
MahanyLaw – Fighting Banks
The two law firms of MahanyLaw and Judge, Lang & Katers join to fight banks. We have handled cases in approximately 34 states but can’t take on individual foreclosure defense cases or loan mod litigation. There simply aren’t enough of us.
MahanyLaw has teamed up with some of the best class action firms in the nation to take on big banks. In 2014, we helped the federal government penalize Bank of America for $16.67 billion. We served as a lead counsel in that case, a case that would become the largest civil recovery against a single defendant in US history.
Obviously Bank of America still hasn’t learned its lesson and we continue to stand guard and investigate ways to bring them into compliance. BoA isn’t the only errant lender / loan servicer, however. Currently we are readying our next major action, this one against Ocwen. Please visit our Ocwen investigations page for more details or to see if we can help you.
Former Bank Employee? Get Cash Rewards for Becoming a Whistleblower
As we noted earlier in this post, we don’t blame the men and women working for Ocwen, Wells Fargo, Ocwen and the other big banks. The fault lies at the top of the food chain. Bank workers and managers can make a difference, however.
Since most residential mortgages are backed by Uncle Sam, anyone with inside information about fraud involving HUD, VA, Fannie Mae, USDA or Freddie Mac loans may be eligible for a large cash award.
How large? Two of our big bank whistleblowers have earned awards of approximately $50 million each! Awards are based on the size of the penalties we or the Justice Department collects from the bank.
Bank employees are often afraid to come forward because of the fear of retaliation. Their concern is justified. Thankfully, Congress and most states have passed strong anti-retaliation laws. We help bank and loan servicer whistleblowers collect the maximum whistleblower awards allowed by law AND are ready to step in if an employer retaliates.
MahanyLaw – America’s Bank Whistleblower and Homeowner Class Action Lawyers
Need more information? If you are a bank employee or other past or present bank insider, contact attorney Brian Mahany directly at [hidden email] or by phone at (414) 704-6731. Brian handles all whistleblower inquiries.
Home owner considering a class action or mass joinder? Email attorney Anthony Dietz at [hidden email].
All inquiries are protected by the attorney – client privilege and kept strictly confidential. (If you work for a bank or loan servicer, don’t contact us from a company device or use a company email address!)
Please, we receive 20 to 30 calls per day from homeowners or people with personal banking issues. We can’t return those calls and do not represent individual homeowners. Unless you are an existing client or a whistleblower the best way to contact us is by email. Every email we receive is reviewed by a lawyer.