Bank of America under fire
A stunning 29 lawsuits against Bank of America could potentially roll into a large class action suit on behalf of homeowners who participated in the government’s Home Affordable Modification Program (HAMP) and filed loan modification applications with the bank in order to avoid foreclosure. Statements were collected from former Bank of America employees last week stating that they were often encouraged and rewarded if they lied to homeowners about the status of their loan modification applications, performed mass application denials when backlog volumes were too heavy, and placed accounts into foreclosure.
Bank of America was one of the largest financial institutions participating in HAMP when it was launched in 2009, and received large volumes of loan modification applications from homeowners to be considered for permanent modifications. In his statement, William Wilson Jr., a former underwriter and manager for Bank of America from 2010 to 2012, said that underwriters regularly had a backlog of 400 applications awaiting review.
When backlogs reached a certain point, BoA employees would perform a blitz during which they would decline 600 to 1,500 applications that had documentation of 60 days or older, according to Wilson. And according to employee statements, when homeowners would call in to check on the status of their application, BoA staff were instructed to create false reasons for their applications being denied, citing that proper loan paperwork had not been received or other fictitious reasons.
Former staffers coming forward
“We were told to lie to customers and claim that Bank of America had not received documents it had requested,” said Simone Gordon, who worked as a senior collector from 2007 to 2012.
Gordon said that if the bank admitted to receiving loan documents, it could come under fire since the bank was required to underwrite applications within 30 days of receiving the documents, but did not have adequate staff to meet underwriting deadlines for so high a volume of applications. She also stated that employees who placed ten or more accounts into foreclosure in a month received a $500 bonus, and other rewards included gift cards.
A Bank of America spokesperson says the company will continue to provide assistance to “customers who are at risk of foreclosure” and that employee statements are inaccurate. The statement also notes that the bank plans to respond more fully in court next month.