While nonjudicial foreclosure laws are not known for their excessive generosity, Hawaii's is particularly draconian. In the Aloha State, it's possible for homeowners to have their houses foreclosed on and sold for much less than their full value worth, without ever realizing the foreclosure is underway.

The law dates to 1874 and its abusiveness is rooted in effort to take land from native Hawaiians. Legislators have repeatedly tried to get the law changed, but they never seem to succeed.

Banks Versus Legislation

One reason for this legislative inaction might be the effectiveness of the bank lobby. According to Netra Halperin, who works for a Hawaii legislator, and herself ran unsuccessfully for office last year, two representatives of Bank of America (BAC) recently met with her. In her account of the meeting, which I've excerpted below, BoA's workers offered a state legislator special access to its mortgage department. I'm omitting the legislator's name because only Ms. Halperin was present at the conversation and she is speaking for herself, not for the legislator.

The quotes are to the best of Halperin's recollection, and represent only the relevant part of a longer conversation:
On about 5:30 p.m., Wednesday, March, Marvin Dang, Attorney for Hawaii Financial Services Association and David Swartley, Senior V.P., Regional Manager, Pacific Northwest, State and Local Government Relations, Bank of America, walked into our office in the capitol.

Swartley: "Bank of America is offering a special hot line to the Bank President for legislators, their staff, their families and constituents who need help with their Bank of America mortgages. It is the same number that we give to congresspeople and their families and aides. The line goes directly to the president's office, though they wouldn't be speaking directly with the president."

Halperin: "I also work for an attorney, James Fosbinder, who defends homeowners from mortgage foreclosure. Can I also give our clients this hot line number?

Swartley: "No, it is only for legislators and their staff, and family -- and constituents."

Halperin "Is that ethical?"

Swartley: "I think it's transparent. It is what it is."

Dang: "Let me explain it to you this way: I used to be a legislator. Constituents would call me about things like potholes. Even though it wasn't my responsibility I would send them to someone who could help them. People only call legislators if their problem is very serious. Our goal is to help legislators, to take the heat from constituents off of them."
Halperin later told me that Swartley claimed that he was visiting Hawaii because of a proposed law, which she assumed was HB894, a bill that would place a five-month moratorium on non-judicial foreclosures. She gave me a copy of the letter that BofA gave her with its special phone number, a copy of the letter announcing the lobbying visit, and later told me that Representative Robert Herkes, Chair of Commerce and Consumer Protection Committee, told the House that BoA spoke to all 76 of Hawaii's state legislators.

BoA's Explanation

To get a better understanding of the situation, I contacted BoA and discussed the letter with spokeswoman Jumana Bauwens, who acknowledged that Swartley had, indeed, visited Hawaii. Noting the bank's "outreach efforts," she also sent a pair of press releases outlining BoA's attempts to work with borrowers.

According to Bauwens, Swartley's visit was intended to "enhance the communication channels with the legislators and other public officials," provide an "update on Bank of America's focus on distressed borrowers and outreach initiatives" and generate "feedback on the geographical areas that we need to focus on during our outreach efforts in April." She also said the phone number "is not unique to Hawaii, it is simply a line designed to help public officials better handle constituent complaints that come their way."
In short, Bank of America confirmed Halperin's story: It is empowering legislators with the seemingly godlike power to get BofA to fix a homeowner's mortgage modification. But in order to preserve the godlike nature of that power, no one else can have access to the number, not even people who most need it -- like lawyers representing people struggling to get modification problems with the bank solved. It's worth noting BoA's press releases didn't say anything about the special hot line number.

Fixing Problems or Currying Favor?

If BofA was really concerned about modifying mortgages, it wouldn't give legislators a special hot line to the president's office. To make it easier for people to modify mortgages, BofA could overhaul its current process. One model would be a process in the settlement the state attorneys general and others recently offered the banks to resolve their illegal and abusive mortgage and foreclosure practices. The proposal would require servicers to set up an easy way for borrowers to submit their documentation electronically, short-circuiting the seemingly endless resubmit documents loop, and mandate responsive time frames to get the borrowers consistent, reliable answers quickly.

Indeed, the initiatives in the settlement proposal far surpass the PR-heavy, questionable outreach efforts in the press release Bauwens sent. Consider the experience of Martin Galvan at a JPMorgan Chase outreach effort at the Los Angeles airport. According to Galvan, the Chase counselor told him that, with all the modification programs, "We don't know what we're doing right now." Obviously, this isn't quite as useful as a hot line to the president's office.

Not For The Public

Indeed, the letter that BofA sent to the legislators was very explicit that the line of communication had to come through the legislators' offices, not directly from the homeowners, emphasizing that "In order to maintain our service commitment to you, it is critically important that the e-mail and phone contacts that are being provided to your staff not be provided to the general public." [bold and italics in the original.]

In her explanation of the Hawaii visit, Bauwens noted that BofA also has phone lines dedicated to "housing counselors, private attorneys and community groups." But if the lines were a priority, one might have expected Swartley to say something like: "Ms. Halperin, while you can't give this number to the foreclosure defense attorney you work for, here's the dedicated line for them." Or even, "While you can't give this number to the attorney, we do have a special line for them, and I'll have some one call you back with it." Similarly, if numbers for housing counselors were so well established and distributed, it's worth asking why the proposed mortgage mess settlement had to explicitly say: "Servicer shall not discourage borrowers from working or communicating with legitimate non-profit housing counseling services."

Perhaps housing counselors, private attorneys and community groups that have received the hot line phone numbers Bauwens mentions could tell me of their experience using them. Did you get a one-business day response, a high-level review of the issues, and an expedited response? And if you're a housing counselor, private attorney or community group working with BofA borrowers on modifications and foreclosures, and you didn't get such a number, let me know that too. Be sure to let me know how to connect with you to confirm your story. If I get sufficient responses, I'll do a follow-up story reporting them.

The Difference Between Help and Lobbying

Why is this phone number such a big deal? Because at its core, this hotline and email address is about defeating borrower-friendly legislation. It's lobbying, not customer service.

By limiting access to the number, BofA is, effectively, offering to help Hawaii's legislators get re-elected, whether because they publicly offer to help constituents or because they use the special access in a targeted way, perhaps to reward campaign contributors or particularly persistent, media-savvy constituents. It's worth noting a legislator's offer to use the unpublished number to help any constituent who calls doesn't change the problematic nature of this lobbying effort. Homeowners shouldn't need their legislators to intervene in order to get their banks to play ball.

By giving this power to legislators, BofA seems to be trying to buy their gratitude. (The link is to research on the impact of small pharmaceutical company gifts to doctors on doctors' decision-making and behavior.) While it will never be known if the hot line affects a legislator's vote on important legislation, it's clear that such influence is the motivation behind the massive resources that have been dedicated to setting this number and service up for every legislator and member of Congress in the country. Or, in BofA's more delicate wording, this hot line may help to "enhance the communication channels with the legislators and other public officials."

BofA's letter to legislators concludes: "Your constituents, our customers, deserve a direct response to their concerns regarding their mortgage needs. This communication is just another effort on our part to ensure that we service their needs in an appropriate and timely fashion."

I couldn't agree more. With that in mind, here's the special hot line number and e-mail address that the company reserved for legislators (and specifically requested I not publish): 888-655-7622, poinquiry@bankofamerica.com.

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Reverse mortgages are currently one of the best ways for seniors to get the equity out of their homes without having to move or worry about foreclosures.


July 17 2013 at 3:57 PM Report abuse rate up rate down Reply

This reply is for Jannette. When Washington Mutual (WaMu) sold my mortgage to Countrywide (CW), they said I was in arrears. I have sent, repeatedly, proof all payments were made to WaMu and CW. WaMu won't correct the problem because they no longer hold the note. Countrywide denied receiving my first letter and proof of payments. I informed the young lady to whom I spoke with a week after mailing the letter, yes, they did receive it because I sent it registered with signiture required. She told me nobody works there with that name. I asked how anyone could sign sign for their mail...she didn't know. My husband sent a fax, it wasn't received. He sent another fax and the person who had it was on vacation and the paperwork couldn't be found in her office and so on and so on. Getting the picture, Jannette. I have been on the phone for two hours with "customer service" which in truth was the collection department, which resulted with me going to the hosptal and missing three days of work because of the threats and stress. I was told that I was six months in arrears but the dollar amount I owe was a little over two months of payments. It didn't add up and I ask how that could be...they didn't know. Which months are missing...they can't narrow that down. The months keep changing. This has been going on for years. Bank of America who has my mortgage now doesn't care that I made my payments and said so. Because Wamu sold the note to CW showing an INCORRECT amount owed on the note, BOA wants that money and are foreclosing on me.

So Jannette, it really isn't that simple. What BOA is doing is illegal. Look up extortion in the dictionary. They want me to pay more money for my home then what was agreed on and if I don't they foreclose on me.

Let me bottom line it for you,Jannette. BOA is as crooked as a dog"s hind leg.

November 06 2011 at 5:50 AM Report abuse rate up rate down Reply

This is standard for free enterprise. If a problem interferes with your business model, you deal with the problem the cheapest way. In this case, dealing with the problem involves special favors for legislators, giving them a way to dispose of constituents who are persistent and determined and might try to use lawsuits or publicity to interfere with your profitability. Paying off the legislators and persistent constituents preserves the basic business model.

This way of handling unhappy customers has undoubtedly involved lawyers, who developed ways to sidetrack or if necessary pay off the customers. It also involved bribing legislators by giving them a way to silence the most determined constituents by giving them, individually, the fair treatment most customers do not get.

If all customers were determined and persistent enough, the business model would be untenable, which proves to free enterprisers that this is all ok. If someone tries to defraud you and you can prevent it by making a big enough fuss and you do not do so, then you deserve to be ripped off. Under this way of thinking, there is nothing wrong with a business model that has fraud as an integral part of it, as long as most people will not fight hard enough to fix being defrauded. If you can make it work, it is ok.

Government regulation could in theory make the business model untenable, but free enterprisers see this as an invasion of the freedom of entrepreneurs to run businesses as they choose.

If this is your view of free enterprise, however, you should not expect it to be the most efficient economic system. The activities of designing frauds and seeking not to be defrauded, are not productive economic activities, but rather a sort of tax, a high transaction cost, on those whose activity actually produces the goods and services we want. Free enterprisers will argue that this distinction is purely subjective, but they live in a world of theoretical abstraction from which ordinary common sense is banished.

March 14 2011 at 9:32 PM Report abuse rate up rate down Reply

Maybe if people pay there mortgages then they won't have a problem with the bank taking there home away? simple

March 14 2011 at 4:58 PM Report abuse -1 rate up rate down Reply
1 reply to Jeannette's comment

I tried calling the number but it just hangs up on me. I've been waiting for a final approval from the "investors" for my short sale for over a month now. My real estate agent, my lawyer, and I have not gotten ANY responses back to our multiple daily inquiries. BofA set 2 different closing dates which have come and gone because of no final approval yet. We are in danger of losing the buyer who has been very patient up until now. I sent an email using the address in the article and here is the automated response:

Thank you for your inquiry to Bank of America. If this matter involves a constituent level matter, a Bank of America Customer Advocate will attempt to contact the customer within two (2 ) business days to acknowledge receipt of the inquiry. Please make sure you have provided the constituent’s full name, property address, loan number and a verified telephone number where they can be reached. Because our customers’ privacy is of paramount importance to us, if you would like Bank of America to respond to your office in addition to the borrower, please also provide a third party authorization signed by the borrower. If this matter involves a request to postpone an imminent foreclosure or eviction, we will contact the borrower as soon as we can to confirm whether additional time has been permitted. Please understand that we typically need at least three (3) business days for us to provide the appropriate assistance.

March 14 2011 at 2:14 PM Report abuse rate up rate down Reply

Thank You, for stepping journalism up a notch, and not letting this discriminating bs go unnoticed. I keep having to ask myself, is it:
"We the People" or is it "I the Government"
... I assume this is the "free ticket- get out of jail car" and happens when our government bails out the bank's that initiated the lending problem. Most companies have only a few choice's, take your losses and rebuild your company or close doors.. BoA supporting this action any further, and not making everyone stand in line as a equal citzen, is flat our discriminative.

March 14 2011 at 12:13 PM Report abuse rate up rate down Reply

.....NEWS FLASH....Greedy bankers have been playing footsie with corrupt politicians.... STORY AT 11....

March 14 2011 at 7:58 AM Report abuse +2 rate up rate down Reply
1 reply to Mark's comment

THIS IS SICKENING! I shared this on my Facebook page, I hope you will too!

March 14 2011 at 6:55 AM Report abuse rate up rate down Reply

BOA needs to wake up to reality evey american needs to pull there money out of its bank. You hear that so many americans are having problems getting a modification on there mortgages its amazing how they work. My sister tried to get a modification and guess what BAO offered them $100.00 off there payment who are they kidding. I dont understand that banks will not help the homeowners but can sell peoples houses with a short sale but not willing to work with the homeowner what is wrong with all of them?

March 14 2011 at 6:34 AM Report abuse +1 rate up rate down Reply

To blame Obama is like saying ... hey I am Republican and ya know I am Stupid. Then bounce your shoulders up and down a bit and raise your left hand when I ask you to raise your Right one.
Just because you don't like Democrats don't just stand there and say ya don't like the President with out an explination. I just sounds .... Stupid.

March 14 2011 at 1:35 AM Report abuse rate up rate down Reply
2 replies to Wayne's comment
hello steve


March 14 2011 at 6:11 AM Report abuse rate up rate down Reply

Hello Steve: to make a comment on my post when I especially write on my post, "with out an explanation, it makes you sound ... Stupid". Then you write a comment with out an explanation. Again it makes you sound STUPID !!..................................................................
Here let me show you...... YOU end your statement with "PEOPLE NEED TO VOTE WITH THEIR BRAINS NOT THEIR HEARTS". Caps??? Guess your a Loud Typist. Here would be a comment. So people Vote with their heart and not their brains and you think McCain and Palin would have been the smart move. I guess you don't live in Arizona, like I do, and where Senator McCain has done Nothing for this State. He graduated at the bottom of his Class at Annapolis where Obama was at the Top of his Class at Harvard. McCain crashed 6 aircraft's. One was not really his fault, when he took a rocket from another aircraft sitting on the deck of an aircraft carrier. The one I like is where he stole an aircraft to fly to an army navy game and crashed it. So do you really think we did not vote for brains ..... We already had one idiot Republican in office ... Just could not handle another one. .... There, Now you have a comment with an explanation!!!!!!

March 15 2011 at 1:22 AM Report abuse rate up rate down Reply