By: Jeena Cho
Loan Modification Process - The Application
This week, we learned that Bank of America was systematically denying loan modifications to homeowners by lying to them. Read the full story [NPR, Salon.com, ProPublica, NBC].
If you have ever applied for a loan modification, you know how frustrating it can be. First, you call the bank to get an application. Instead of the bank emailing the application, you have to wait for it to be mailed to you. (Because, none of the bank employees supposedly have email). Once you get the application, you have to complete it, compile a massive amount of documents, write a hardship letter and either mail or fax it back to the bank. You call the bank, and to your surprise, they never received your loan mod application. So, you start all over again and re-send the application. If you’re lucky, you’ll receive a letter acknowledging the application.
Loan mod application? What application?
Another few weeks go by and you receive another letter stating it either didn’t receive a piece of information (you already sent), or that it needs additional information. Every time you call the bank, you speak with a different agent and each agent tells you something completely different than the last. None of the agents of course have a direct number or an email so you can never reach the same person twice.
What do you mean? You didn’t get my application?
Frequently, my clients complain that the banks are out to drive them crazy. After years of hearing the same complaint, I suspected that my clients were right. The banks were deliberately stalling. Well, this week, we find out that at least one bank, Bank of America was doing exactly that.
You must be lying.
In a declaration filed by Simone Gordon, former employee of Bank of America as Senior Collector of Loss Mitigation/ Mortgage states:
“We were told to lie to customers and claim that Bank of America had not received documents it had requested, and that it had not received trial payments (when in fact it had). We were told that admitting that the Bank received documents would “open a can of worms” since the Bank was required to underwrite the loan modification within 30 days of receiving those documents, and it did not have sufficient underwriting staff to complete the underwriting in that time.”
Even more damning, she goes onto say:
“We were regularly drilled that it was our job to maximize fees for the Bank by fostering and extending delay of the HAMP modification process by any means we could - this included by lying to customers.”
Lie and get rewarded. Or get fired.
Like all good employers, Bank of America used both carrots and sticks to encourage this behavior. Bank employees were rewarded with a $500 bonus if s/he placed ten or more accounts into foreclosure in a given month. “Employees who were caught admitting that Bank of America had received financial documents or that the borrower was actually entitled to a permanent loan modifications were disciplined and often terminated without warning.” said Gordon.
[Download the entire Simone Gordon declaration here.]