Ex-Workers: BofA Lied, Rewarded Foreclosures with Gift Cards

Ex-employees say Bank of America lied, rewarded foreclosure with gift cards
Bloomberg via Getty Images
By Michelle Conlin and Peter Rudegeair

June 14 - Six former Bank of America Corp (BAC) employees have alleged that the bank deliberately denied eligible home owners loan modifications and lied to them about the status of their mortgage payments and documents.

The bank allegedly used these tactics to shepherd homeowners into foreclosure, as well as in-house loan modifications. Both yielded the bank more profits than the government-sponsored Home Affordable Modification Program, according to documents recently filed as part of a lawsuit in Massachusetts federal court.

The former employees, who worked at Bank of America centers throughout the United States, said the bank rewarded customer service representatives who foreclosed on homes with cash bonuses and gift cards to retail stores such as Target Corp (TGT) and Bed Bath & Beyond Inc (BBBY).

For example, an employee who placed 10 or more accounts into foreclosure a month could get a $500 bonus. At the same time, the bank punished those who did not make the numbers or objected to its tactics with discipline, including firing.

About twice a month, the bank cleaned out its HAMP backlog in an operation called "blitz," where it declined thousands of loan modification requests just because the documents were more than 60 months old, the court documents say.

The testimony from the former employees also alleges the bank falsified information it gave the government, saying it had given out HAMP loan modifications when it had not.

Rick Simon, a Bank of America Home Loans spokesman, said the bank had successfully completed more modifications than any other servicer under HAMP.

"We continue to demonstrate our commitment to assisting customers who are at risk of foreclosure and, at best, these attorneys are painting a false picture of the bank's practices and the dedication of our employees," Simon said in a email, adding the declarations were "rife with factual inaccuracies."

Borrowers filed the civil case against Bank of America in 2010 and are now seeking class certification. The affidavits, dated June 7, are the latest accusations over the mishandling of mortgage modifications by some top U.S. banks.

Mortgage problems have dogged Bank of America since its disastrous purchase of Countrywide Financial in 2008. The bank paid $42 billion to settle credit crisis and mortgage-related litigation between 2010 and 2012, according to SNL Financial.

Bank of America and four other banks reached a $25 billion landmark settlement with regulators in 2012, following a scandal in late 2010 when it was revealed employees "robo signed" documents without verifying them as is required by law.

But problems have persisted. Since 2012, more than 18,000 homeowners have filed complaints aboutBank of America with the Consumer Financial Protection Bureau, a new agency created to help protect consumers. Recently, the attorney generals of New York and Florida accused Bank of America ofviolating the terms of last year's settlement.

The government created HAMP in 2009 in response to the foreclosure epidemic and to encourage banks to give homeowners loan modifications, allowing some borrowers to stay in their homes.

The Blitz

The court documents paint a picture of customer service operations where managers roamed the floor with headsets, able to listen into any call without warning. Service representatives were told to lie to homeowners, telling them their paperwork and payments had not been received, when in reality they had.

"This is exactly what's been happening to homeowners for years," said Danielle Kelley, a foreclosure defense lawyer in Florida. "No matter how many times they send in their paperwork, or how often they make their payments, they simply can't get loan modifications. They wind up in foreclosure instead."

The former employees said they were told to falsify electronic records and string homeowners along in foreclosure as long as possible. The problem was exacerbated because the bank did not have enough employees handling modifications, adding to the backlog of cases purged during the "blitz" operations.

Once a HAMP application was delayed or rejected, Bank of America would offer an in-house alternative, charging as high as 5 percent when the loan could have been modified for 2 percent under HAMP, according to an affidavit by William Wilson, who worked at the bank's Charlotte, North Carolina office.

Wilson, who was a case management team manager, said he told his supervisors the practices were "ridiculous" and "immoral." He said he was fired in August 2012.

Bank of America said it was not at liberty to discuss personnel matters.

Increase your money and finance knowledge from home

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Investment Strategies

What's your investing game plan?

View Course »

Add a Comment

*0 / 3000 Character Maximum

52 Comments

Filter by:
wen_peterson

I too, have dealt with BOFA on this. Since acquiring my loan from Countrywide, where I had been modified to a reasonable payment of 1250.00 with taxes and insurance, they refuse to honor it ,even after supplying them with signned notorized documents,saying I am now with them and need to have all documents in their name. I have sent documents over and over the last year and half and they are always lost them, or my house didnt qualify, on and on. They accepted 20,000 in my behalf from our state stimulus to help homewners only to apply to back interest and now the interest they are placing on my loan makes my home out of reach, not to mention they have raised my payment to 3850.. They are crooks, something needs to be done. As a mortgage pofessional I know what is required to qualify. I have made aware to the Dept. of Justice. You would noty believe my entire dealings with BofA. Homeowners need to make their cases known.,

June 18 2013 at 1:18 PM Report abuse rate up rate down Reply
Noindex

B of A has nothing to worry about because they are "too big to fail".

June 17 2013 at 11:56 PM Report abuse rate up rate down Reply
jelun

They could have at least given them gift cards to nice stores.
Isn't it funny, though, how nobody "blows the whistle" while still employed?

June 17 2013 at 10:41 PM Report abuse rate up rate down Reply
1 reply to jelun's comment
ervaughn

Thats not Funny, They are Scared to Death and want to Keep their Crappy Job!!
Don't you think? Are you Defending Bank of America, Really?

June 19 2013 at 9:55 AM Report abuse rate up rate down Reply
joeshop8

I just heard Clark Howard on the radio talking about BofA and this way bad practice and I agree these Scum should locked up for what They did to struggling Homeowners!!

June 17 2013 at 10:25 PM Report abuse rate up rate down Reply
vieragam

I rent. I do not want to deal with banks on any level, but especially when they own MY home. I have been renting for 20 years and am very happy. I am now retired, and have no bank worries or home worries. It is not safe owning a home anymore....because then you have to put your trust into a greedy, lying bank. I will not.

June 17 2013 at 10:19 PM Report abuse +2 rate up rate down Reply
1 reply to vieragam's comment
yurday6

Even if you pay cash, you have to put up with the greedy counties raising real estate taxes every year. My school districts budget did not pass, so they go ahead and have a sneaky revote just one week before announcing it,what BS. They never had a revote when the budget passed. These crooks and liars should all get fired.

June 17 2013 at 11:30 PM Report abuse rate up rate down Reply
rickbcards

bank of america made it extremely hard to modify our loan and after months we gave up. Good News today though. BOF A sold our loan and we won't have to deal with them any longer!

June 17 2013 at 9:54 PM Report abuse +2 rate up rate down Reply
propertyrental66

Once again, the press treats a bank as though it runs itself with no human intervention. It's time to name names of those executives that set the policies.

June 17 2013 at 9:05 PM Report abuse +1 rate up rate down Reply
1 reply to propertyrental66's comment
vieragam

All the changes and orders come from the top and drip down until it gets to the employees in the banks. I know....I worked for BofA in the 90's. And I never trusted them so I kept most of my $$ in another bank. My best wishes go out to all those that were scammed, lied to, and robbed by BofA. Enough of this bank....it needs to simply close and go away.

June 17 2013 at 10:12 PM Report abuse +1 rate up rate down Reply
timjofred

BoA should be held accountable and then pay penalties to every customer they have ever cheated. I used to be a BoA customer and will sing a song when they succomb to the grime of their own greed.

June 17 2013 at 7:41 PM Report abuse +3 rate up rate down Reply
kiddjazman

I believe everything that I\'ve read regarding the complaint! These people worked there, they were part of it. What do they have to gain from lying? BofA needes to be done away with once and for all!!

June 17 2013 at 7:32 PM Report abuse +5 rate up rate down Reply
tennesseekiltie

Watch your mortgage payments and additional principle payments closely.
I have been aggressive in paying off mortgage with BOA by paying extra principle.

On a strictly princple payment of $3000.00, I was credited for only $2469.79.

On a $5000.00 principle only payment, I was credited for only $3786.42. They subtracted my monthly mortgage payment that came from my checking each month.

When you question BOA on practices mentioned above, they treat you like a dumb ass. When you have them cornered, BOA can't believe that something of this nature can happen. Did Bank of America make it up to me, as far as lost interest payments? HELL NO.

I'm at the end of my mortgage and looking for the end of dealing with the crooked bastards of Bank of America!!

I would not let my dog have an account at Bank Of America, but then again, I don't own a dog

June 17 2013 at 6:47 PM Report abuse +5 rate up rate down Reply
1 reply to tennesseekiltie's comment
arwanaserv

So tell us.. what do you REALLY think of BofA?? LOL.. just kidding. I am with you 110%! I contracted vendor services with them and fully understand your points. They treated the written terms of our contract like it was meaningless unless, of course, it was something in their favor.

June 17 2013 at 11:40 PM Report abuse rate up rate down Reply