California Real Estate Fraud Report

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Bank of America Employees Say They Were Told to Lie about Loan Modifications

The following story, as reported by NBC News, is no surprise to the thousands of distressed homeowners who have tried and failed to get home loan modifications under the government’s HAMP program (Home Affordable Modification Program). Realtors® who try to help homeowners with loan modificationsAlthough the bad guy in this story is Bank of America, I can safely say that homeowners whose loans are with all of the major big-name banks have experienced the same frustrations.

In sworn testimony in response to a Massachusetts lawsuit filed on behalf of dozens of Bank of America borrowers in 26 states, former employees of the bank have acknowledged that they routinely denied qualified borrowers a chance to modify their loans to more affordable terms.

That’s not the shocking part: Bank of America actually paid cash bonuses to its employees for pushing homeowners into foreclosure, this, according to affidavits filed as part of the lawsuits.

Simone Gordon, who worked in the bank’s loss mitigation department until February 2012, said “We were told to lie to customers. Site leaders regularly told us that the more we delayed the HAMP [loan] modification process, the more fees Bank of America would collect.” Gordon is one of six former employees who recounted stories where the bank deliberately thwarted the efforts of the homeowners, their housing counselors and attorneys.

Read the Affidavit of Simone Gordon.

William Wilson Jr., a manager in the company’s Charlotte, N.C., headquarters, said that the point of delaying or denying the HAMP loans to which many borrowers were qualified was so Bank of America representatives could upsell them to a more costly “in-house” loan modification. Rates for these bait-and-switch in-house loans were 3 points higher than the 2 percent rate available under HAMP guidelines, he said.

“The unfortunate truth is that many and possibly most of these people were entitled to a HAMP loan modification, but had little choice but to accept a more expensive and less favorable in-house modification,” he said.

Read the William Wilson Declaration.

The testimony of these employees makes clear why the government’s Home Affordable Modification Program, initiated in 2008, has been a dismal failure.

Bank of America has denied the allegations and issued the following statement: “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,” a spokesman said in a statement. “While we will address the declarations in more depth when we file our opposition to plaintiffs’ motion next month, suffice it is to say that each of the declarations is rife with factual inaccuracies.”

© Copyright 2007-2018 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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