Bank of America Foreclosure Reviews: Whistleblowers Reveal Extensive Borrower Harm and Orchestrated Coverup (Part II)

In the executive summary to this series, we provided an overview of OCC/Federal Reserve foreclosure reviews which were abruptly settled at the beginning of January. Critics anticipated that the flawed design, of having supposedly “independent” review firms hired by the banks themselves, meant the reviews were highly unlikely to find much if any damage to homeowners. Leaks during the course of the reviews confirmed these concerns, revealing that the review process at many of the major servicers was chaotic and the reviews were designed and scored so as to make a finding of harm virtually impossible.

As bad as that sounds, the reality is even worse. We obtained extensive review documentation from whistleblowers at Bank of America and debriefed them at length. They provided compelling evidence that the foreclosure reviews were plagued by persistent, widespread efforts by Bank of America to avoid any finding of borrower harm. These efforts were supported and enabled by its “independent” review firm, Promontory Financial Group.

The whistleblowers, all of whom were told their role would be to act as investigators and help borrower get compensation they deserved, described the review process as seriously flawed. Yet even with those obstacles, they saw abundant evidence of serious damage to borrowers. The whistleblowers reviewed 1600 borrower files in a “live” environment, and saw hundreds more in the attenuated start-up period. Reviewer estimates of harm varied widely primarily because they worked on different tests and thus focused on different documents and issues (see Appendix II to the Executive Summary for a description of tests). Whistleblowers were asked to estimate the percentage of harm and serious harm in the files they reviewed. The lowest estimate of harm was 30% and the highest estimate of serious harm was 80% of files reviewed.

We said we would set forth the support for our major findings, in a series of additional posts. These findings are:

Overwhelming evidence of widespread, systematic abuses . No interviewee estimated harm as occurring in less than 30% of the files they reviewed; one put it at 80%. The interviewees did not simply describe individual borrower suffering in graphic terms (as one put it, “I saw files that would make your stomach turn.”) Multiple interviewees would describe widespread, sometimes pervasive patterns of impermissible conduct.

OCC’s badly flawed review structure compounded by complex, chaotic, and undermanaged implementation by Promontory. By delegating so much of the review process to “independent” firms (many of whom had little or no experience with servicing and foreclosure), the OCC doubled down on the same incompetence and poor standards that Bank of America and the other servicers already had in their servicing departments. Many of the flaws in the review process (compartmentalized reviews, conflicted supervisors, poor senior review for issues or disputes) were mirror images of the problems at the servicer. These problems were made worse by a bizarre management structure and frequent changes to test content and directives.

Concerted efforts to suppress finding of harm. The organizational design, the way the reviewers were managed, the elimination of areas of inquiry, and evidence of records tampering with Bank of America records all point to a multifacted, if not necessarily well orchestrated, program to make sure as much damaging information as possible was not considered or minimized.

Dubious role of Promontory. Promontory was a poor choice to perform the review. It had virtually no internal expertise in serivcing, provided little or no supervision, and, either by design or incompetence, managed to politicize the review process rather than make it independent.

We discuss the first major finding below.

Overwhelming Evidence of Widespread, Systematic Abuses

In many cases, the abuses unearthed, as borrowers suspected, would be significant enough in and of themselves to qualify it for one of the large award categories, which for completed foreclosures would be either getting their home back plus $15,000 or $125,000 plus any equity in the home. As we will see, reviewers often saw foreclosures that looked to be the direct result of the predatory practices or sheer negligence.

We have limited our compilation below to the activities that the reviewers saw often enough to suggest they were a frequent, if not pervasive, outcome for similarly situated homeowners. Many of these systematic abuses have also been flagged as widespread by foreclosure defense attorneys.

Major abuses include:

Nine circles of modification hell. We have jokingly depicted Timothy Geithner’s comment that the widely criticized HAMP mortgage modification program was simply intended to “foam the runway” evokes the image of an overloaded B52 landing with its wheels up on airstrip covered with borrowers lying down, side by side, who are then crushed to a bloody pulp. It turns out that picture is not far off the mark.

The numerous public stories of borrowers getting confused and often contradictory instructions, complying with all bank requests, making all required payments, and nevertheless being foreclosed on, are confirmed by over 450 borrower records reviewed by our whistleblowers on the modification tests (see “C and G Test” in the description of tests in Appendix II in the executive summary). For instance, one widespread complaint was that the servicers asked for borrower information, the borrower would fax it to the number given, the bank would then claim they had not gotten it, and would ask for it again, with this cycle repeating not once, but four, five or more times until the borrower was foreclosed upon. To add insult to injury, the justification often was that the borrower had failed to send in the requested documents. The reviewers found numerous examples where they could find notes of borrowers calling in to make sure documents were received, and the reviewer could find the records every time, but the borrower was told they could not be located. And that was far from the only problem:

We would put the numbers together to see whether they were offered the right modification and determine whether payments were actually made. And that was where a lot of the problems came in was they were oftentimes put into the wrong program, they would be told to make certain payments, then the bank would find out, “Oh, that’s the wrong program, let’s start all over again,” and in the meantime we’re six more months into it and it’s just getting uglier and uglier, or a borrower may be given two or three or sometimes four different kinds of modifications at once, get very confused as to what they’re supposed to be doing, told to make a payment on this and to make a payment on that, and so often the payment amount of the modification was more than the original mortgage payment anyway. So people would just, they’d get very confused and they would give up. They’d just let their homes go. “We can’t deal with this anymore.”

Another widespread problem was modifications not being counted as effective, despite having the borrower sign a modification letter and make timely payments on it, because it was not boarded properly (as in loaded into the servicing platform). And note also in this exchange with Reviewer D, this was not treated by Promotory or Bank of America as a borrower harm:

Reviewer D: Well, and I think that’s the biggest, the biggest disconnect about mods is, when we were looking at permissibility of fees, we were simply supposed to look at, compare each fee against each matrix and determine permissibility.

Yves Smith: Right.

RD: However, if I can clearly see on a file a signed modification –

YS: Mmhmm.

RD: – I can tell that it was received on time.

YS: Right.

RD: And I can tell that there’s no reason why that mod should not have been boarded into the account, but it wasn’t… And then the file ended up going into foreclosure.

YS: Yeah.

RD: Technically, per our guidance, those fees are not impermissible. But don’t you and I both think that they should be all impermissible?

YS: Oh, and then, and then that wouldn’t go over to the mod people [the G test reviewers who examined whether modification were appropriate for the borrower and handled correctly] because there was – because if it wasn’t boarded it’s not considered to be a mod, so that whole category wouldn’t have been examined. You’re saying there’s a whole category that was basically missed…

RD: I do not believe the mod team was looking at that.

YS: Right. Right.

RD: So whether one hand talked to the other – you know, the mod team, even if it went over to test G or whichever one was doing the mods, and they were able to determine that the mod should have been boarded, whether or not they’ve been sent – I know they didn’t get then sent back to test E and decided to make the fees impermissible.

YS: Wow, so say that again, so say that again. On permanent mods – just repeat that. So on permanent mods you saw…

RD: So we would see files where a permanent mod looked like it should have been 100% a go.

YS: Yes.

RD: It was signed by the borrower, it looked like it was returned on time, the borrower sent in the first mod payment on time, but then for some reason it never got boarded onto the account.

YS: Right.

RD: And then the foreclosure happened –

YS: Right.

RD: – because it never got boarded. So it still looked like –

YS: Right.

RD: – they were 90 days late or more.

YS: Yeah.

RD: And so all resulting foreclosure-related fees, inspections, attorney fees, etc., were still on the account.

YS: Yeah.

RD: According to each matrix, those fees were permissible because they fell within the guidelines of each matrix.

YS: Right.

RD: However, based on logic and circumstance, those fees should not be permissible because the mod should have taken place and the foreclosure never should have happened.

And even seemingly straightforward cases of borrower harm would be rejected. The files all contained audit notes, and many of the reviewers would check what happened to the cases they worked on. Here is one example of how a borrower who sent in all of her required payments was nevertheless found to have suffered no damage:

It was a C test, so that was a Level III test, and this was one specific that the borrower had a trial mod that was granted. The trial mod was signed by both the bank and the borrower, and a copy of it was in the system. The borrower continued to make payments every month on the trial mod and the lender kept returning the payment.

So the actual reviewer, the level 3 reviewer that reviewed the loan, said that there was harm because the bank returned the agreed payment for the trial mod. So the QA reviewer [quality assurance, Bank of America staffers who would push back against reviewer finding of harm, more on that in later posts] found no harm. They disputed it and said that no harm was found because the borrower was not making the contractual payments according to the original loan mods. So that person didn’t, wasn’t even smart enough to realize that there was a whole new contract in place that amended the original one and this was the new payment.

When it made it to Promontory, and Promontory’s response was the lender was returning the payment because the borrower was not making any. So I’m not sure how they were returning payments that were not made, but you would denote in the system where, you know, it would say received check number whatever and the amounts of this, you know, to apply towards trial payments, and then the next note you would see was, you know, an exception payment that would say “Please return this payment for this amount, it’s not enough for the contractual payment.” So it’s like they were not even recognizing that there was a trial mod in place, although there was.

This reviewer found a 100% rejection rate by QA on all the finding of harm on his files, not just the ones he logged, but also the ones recorded by other reviewers doing the other tests on the same file.

Suspense account abuses. “Suspense accounts” are when borrower funds are received and held by the bank but not applied. Funds may be held in suspense for a “reasonable” amount of time, which is considered to be only a few days and a key precedent in bankruptcy court has stipulated as the limit for “reasonable” if the amount in suspense equals or exceeds the full amount of the principal and interest due is 15 days. Yet foreclosure reviewers were not given this information and were told to treat funds held in suspense for months, even as long as 24 months, as reasonable. Of course the result of funds not being applied to interest and principal is an accumulation of late fees and eventual foreclosure. This problem occurred routinely with modifications. As one reviewer observed:

Let’s say someone made a payment and there seemed to be some very mass confusion among the bank employees themselves. The payment would be made and everything would be, the entire payment would be placed in or used to cover late fees. And then a letter would be sent to the borrower saying, you know, “You’re still in arrears,” or this or that, and sometimes it would be charged to principle. Sometimes it would just sit in a – what do they call it, the account – a suspense account for months, and then all of a sudden appear as an interest payment, or half to an interest payment, half to escrow, half to – or, and a portion to late fees. This went on all the time, and that was one of the biggest questions, even as level 3s, most of us having been underwriters, we would look at these and say, you know, “I don’t understand how this payment was broken up or why it sat in a suspense account for four or five months before anything was done with it. And it seemed the bank employees weren’t always very clear where it should go.

This extract is even more troubling than it appears. There is a very clear hierarchy for the application of borrower payments, set forth both in loan documents and Federal law: interest first, then principal, then late fees, then various other charges. The idea that a payment would be divided between interest and escrow is a sign of at best gross incompetence. And per Fannie guidelines, full payments are never to be put in suspense. The Consumer Finance Protection Bureau’s new guidelines track Fannie rules already in place:

Payments Promptly Credited: Servicers must credit a consumer’s account the date a payment is received. If the servicer places partial payments in a “suspense account,” once the amount in such an account equals a full payment, the servicer must credit it to the borrower’s account.

Obvious padding in capitalized fees in mortgage modifications. Two reviewers noted utterly implausible charges being wrapped into modifications. One did not keep close tabs but merely noted he saw overly large amounts too often. The other went into detail:

For a borrower that has merely been late, say 6 months, but let’s be generous and call it 12, since they might have been in arrears and got current in the past, there’s no way you can get to over $5000 of legitimate charges and fees, particularly since many states, as well as Fannie and Freddie, limit the biggest item, which is attorney fees. On my test, 40% to 50% of the files had mods, and on them, I’d see offers with capitalized charges of $10,000 or more, one of $85,000, more than 50% of the time. It was mainly $10,000 to $20,000.

I’d ask for a modification analysis to get a breakdown and see where this came from. I’d do an RFI [request for information] and I’d always get the answer back in 24 hours, “uncollectable” [RFI could not satisfy the request].

While it is possible some of these cases could be justified, the combination of high frequency, startlingly high charges, and no support for them does not pass the smell test.

Impermissible charges in bankruptcy. Like the unboarded modifications and the suspense account abuses, this category was simply not captured, in part due to test design, but more important, active dissemination of misinformation. One abuse cited repeatedly by foreclosure defense lawyers and bankruptcy lawyers is impermissible fees being charged after a Chapter 13. During the period when a borrower payment plan is being approved and the 60 months under the plan, all creditors are “stayed”, meaning they cannot impose new charges on the borrower. All claims (principal, interest, any fees owed) must be submitted to the court prior to the negotiation of the plan. The borrower must make his 60 months of payments under the plan. Chapter 13 plans are very demanding and contemplate that the borrowers live meagerly. The borrower emerges with no debts and (unless he had an unexpected windfall) no savings.

Servicers often (too often) accumulate late fees or other fees during a bankruptcy, even though these fees are impermissible (payments made pursuant to a Chapter 13 are timely irrespective of what the mortgage originally specified), and hit the borrower with them shortly after emerging from Chapter 13 The borrower is by design broke and can’t afford court fees. Many borrowers lose their house this way.

Many of the reviewers were familiar with this issue, and asked about it in training. The only reference to it in the E test, on fees, was not even a question but a “tool tip” for how to answer the corresponding question next to it.

Note any additional items where potential harm could occur, including but not limited to: robosigning, bankruptcy issues, BPP errors, etc.

Reviewers report that trainers said that fees may be incurred to the borrower during a bankruptcy, but not charged to the borrower during that time. This is simply inaccurate. These instructions were repeated by the various subject matter experts (known as proficiency coaches) as well as Bank of America staff (unit managers and quality assurance, see Appendix I; we’ll discuss these roles in more detail in future posts). Reviewers who nevertheless were troubled enough to look at borrower records on this issue report not only late fees accruing during bankruptcy, but also more sizable charges, such as attorney fees. Entire categories of loans were treated improperly in bankruptcy. I asked whether borrowers would be hit with large back payments shortly after emerging from bankruptcy:

Reviewer B: That would show up, but there were no questions that we would answer that would – there were no questions regarding a bankruptcy and fees other than if the borrower, if the lender filed a motion for release for a proof of claim and they charged a fee for it, we would just make sure that that amount was not over any investor limit or against bank policy, but as far as fees being charged during a bankruptcy, we answered no questions regarding that. In addition to that, the way they applied payment – and my, most of my bankruptcy experience is with Florida –

YS: Mmhmm.

RB: – and I know that it’s a f– you know, bankruptcy is federal, however each state can opt out of some federal things and choose to follow their local rules, but with payments being made, I’m not exactly sure how banks’ policies can trump federal law, but I was always under the understanding that when a person files bankruptcy, every post-decision payment they made should be filed to, should be applied to the current amount due and then any back payments are going to get paid through the trustees of the chapter 13 plan.

YS: Mmhmm.

RB: Bank of America had a policy that that was the case with the exception of interest-only loans, adjustable-rate mortgages. They had like several exceptions to that. So there were a lot of people that had filed bankruptcies and the payments were never applied to post-decision payments. They were applying them to back payments that, you know, could have been two, three years in arrears.

YS: Oh, and those were supposed to be basically wiped out in the bankruptcy or addressed in the bankruptcy.

RB: Correct. And they said how – right, which then in turn would create those extra late fees that you were talking about.

YS: Mmhmm. Well that was one way those could be created. Okay. And how many cases like that did you see, or did you hear about those from your peers? I mean, how –

RB: I saw at least, almost every bankruptcy I looked at, when I was looking for fees and I was – and one of the questions too that we answered was, were payments applied, you know, according to the loan docs and were they applied according to investor guidelines and state laws, and almost every bankruptcy I looked at, I would say 95% of them, those payments were applied to back payments instead of current.

Reviewer E flagged widespread problems with bankruptcy charges:

RE: Their fees in their system and their fees in the paperwork they submit to the bankruptcy court don’t match.

YS: [indrawn breath alarmed huh]

RE: They don’t match. They’re not submitting full information to the bankruptcy court. And this is what I was told. “We just can’t charge the borrower while they’re in bankruptcy, but we can assess them.” I said, “So you can rack up $10,000 worth of fees and if you don’t bill till them until after the fore– after the bankruptcy, it’s legal?” They said, “That’s exactly correct.”

YS: Yeah. Yes, you’re correct. So basically you are saying, basically you’re saying that every bankruptcy you saw in the system was wrong? So that every bank–

RE: No, I can’t say every one.

YS: But every one you saw. There’s a difference. I mean, every one –

RE: But – oh, oh, well, yeah. Most of the files I looked at, they would submit minimal fees to the bankruptcy court. Or late fees assessed prior to the bankruptcy filing. Or they would, they were doublecharging fees. They would charge for the same thing and call it a bankruptcy fee and a foreclosure fee.

YS: Wow.

RE: And they would – they were– it’s ugly. And we were told not look at them.

YS: So –

RE: “We’re not looking at federal law. Federal law is not our problem.”

Note that the OCC’s order to Bank of America states the review will include:

(b) whether the foreclosure was in accordance with applicable state and federal law, including but not limited to the SCRA and the U.S. Bankruptcy Code;

Zombie title. It has only recently come to the public’s attention how much borrowers are hurt by “zombie title“, which is when a bank completes all the steps up to the sale of the home, including evicting the borrower, yet neither takes title itself nor sells the property to a third party. Recall that the reviews included foreclosure actions that started in 2009 and 2010 so foreclosures left in limbo that started during this period would be eligible for relief. Yet complaint letters that cited this sort of problem were rarely addressed properly and rejected when they were because they did not fit in the review template:

Reviewer A: I’ll give you an example of some, one in my case. I had a file that I had been working on and I had already answered the questions regarding modifications and so forth, but I had, something just wasn’t working as far as, in my opinion, because this particular borrower kept saying, “I’m being charged for the taxes. The county’s coming after me for taxes, but you foreclosed on my home.” And she kept writing and calling the bank and telling them, “Look, they’re dinging my credit, they’re coming after me, the county’s coming after me for taxes, you foreclosed on my home, you evicted me – why are you insisting that I pay the taxes?” Well, that took me off in a whole different direction and I wanted to understand why this woman was convinced that her house was foreclosed, because the bank was showing that it hadn’t been…

So I started digging, and I actually went to public records, which I wasn’t supposed to do, and I found that what had happened was that she had gone through the foreclosure process, everything had gone accordingly. When the house was sold at the foreclosure steps, or on the courthouse steps, the attorney of record never finished the sale. So there was a foreclosure deed, there was everything, but it was never notarized and recorded. But it was in the docket as an unfinished sale. So she technically did own the home, but she couldn’t sell it, she could do anything with it, because the bank had created a dirty title. So the bank wasn’t paying the taxes, because the sale never happened, even though it got all the way to the courthouse steps and was technically sold, so she was getting billed for all the taxes.

YS: What did your supervisor say when you found that?

RA: That it was irrelevant to the C test that I had been working on. I was digging too deep and I needed to stop. But my issue was, there’s serious harm here because the bank never finished, the bank and the attorney never finished the paperwork. She’s got her HOA all over her for not doing the maintenance, they’re suing her –

YS: When she’s been evicted.

RA: The county is – yeah, she’s been evicted. The county’s suing her for back taxes. I mean, her life is a shambles because you guys never finished the paperwork, there’s no harm. The bank’s position was there was no sale. Well, yeah, there was. There was enough to make the title cloudy. And made her life miserable. She couldn’t get credit. She couldn’t rent anyplace. She was living with friends. I’m sorry, there’s harm. “Well, that’s not relevant to the C test you’re working on. Quit digging.”

Force placed insurance and force place escrow. Reviewers reported frequent instances of force place insurance, which is not surprising given that Countrywide has a captive insurer and was a recognized leader in this dubious practice. Force place escrow occurred on modifications that were not completed, whether due to Bank of America not approving the mod or failing to board it properly. Escrow was a requirement for a mod if the borrower did not have one already. The borrower would get the worst of all possible worlds, facing new escrow charges while not getting their modification. Forced escrow was not captured in the fees test, and if a mod was not completed it would not show up in the modification tests. These charges could become significant to borrowers and reviewers on the fee related tests said they saw them often.

As this list indicates, all the abuses were widespread and often resulted in a foreclosure or a borrower experiencing other significant damage. Yet the OCC would have you believe that the reviews failed to uncover any real evidence of borrower harm.

The next post in our series will describe the chaotic and badly managed review process and how it revealed underlying severe and widespread weaknesses in Bank of America’s servicing platform.

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  1. change agent

    Thank you for this incredible work; I’m in the midst of a five year battle to save the only home my child has known, with Bank of America. I just sent you twenty bucks, wish I could do more, but my lawyers are going to need it…

    1. Faith

      Unfortunately, the people we need to read this will not. The people we have been trying to reach with this info are so sick of listening to us. Unless we find a way to reach more with this info we are doomed to more of the same.

      I suggest gathering up as much info as possible in nice copied print outs and
      hand them out at your local grocery along with the question-do you know if you have MERS on your mortgage, what does it mean to you?
      and how to tell if you do.
      Print out instructions on how to search Registry of Deeds.
      We need to educate people.

  2. Klassy!

    This is useful because it catalogues the different abuses and shows how the abuses play out.
    So many articles you read give you the impression that yes, there is a problem with lost titles or robosigning but it is just a matter of banks doing things too quickly and that when it gets sorted out it will show the banks are in the clear.

    1. Ms G

      The deep truth always lies in the details. Which is why MSM and non-MSM frequently simply skate over issues, resulting in the blunting or minimization of the issues due to a sort of MEGO phenomenon.

      Agreed, the rich detail in this budding series is the bomb.

  3. OMF

    There is no doubt that Bank of America was engaged in an organised campaign to torpedo the review process. While many systems at the bank appear dysfunctional, in reality the processes for harming, deceiving and defrauding borrowers were a well oiled machine. This appears also to apply to BoA’s control over the review process.

    RE: Their fees in their system and their fees in the paperwork they submit to the bankruptcy court don’t match.

    If they’ve gone this far already, profited so much, and gotten away with everything, why bother filing the correct paperwork with the court? What is the judge going to do? I mean really?

    This is the real problem. Strip away the financial complexities and system failures. It’s all about people with responsibilities doing whatever they please with no fear of consequences. This is what society looks like when the rule of law breaks down.

    I blame the judges who let these things slide.

    1. diptherio

      Well, Judge Magner, for one, down in Louisiana, fined Wells Fargo over three million dollars for doing this very thing. And that was just on one foreclosure/BK.

      Our Judicial system can, conceivably, do something if enough Judges take their cue from Magner.

  4. Westcoastliberal

    This debacle is as bad or worse than what New Orleans suffered during Katrina. Millions of families put out on the street with zero help from the government. And the pain goes on. “Foaming the runway” indeed.
    Thanks for digging into this issue, Yves.

  5. diptherio

    Re: misapplication of payments

    As I’ve pointed out before, and as most here are probably already aware, Wells Fargo admitted in court that its accounting software automatically applies payments first to fees, then to interest, principle, and escrow. They also admitted that their software automatically violates bankruptcy stays in exactly the ways mentioned here. Wells took a $3.1 million fine rather than change their software.
    It would appear that BoA’s software operates in the same fashion.

    My only real question is, how do these OCC and BoA and Prom. people sleep at night? Oh yeah, and why isn’t this all over 60 Minutes?

  6. Richard Davet

    Let all borrowers and taxpayers go to the source of the funds in the debacle known as “The GSE Business Model” and insist upon accountability from the OIG at FHFA.

    We now have the people who created the mess charged with the responsibility of resolving it.

    No government “guarantee” and the problems would be evident as the tide rolls out revealing the culprits.

  7. weegeegoil

    Yves, I am so grateful that you have dug in and done this, and all the preceeding work to expose this mess.
    My partner has been fighting BofA since 2009 (w/ my help).From the onset, this loan was just a horrendus mess, starting w/ some awful origination issues (it is an agricultural property, read: farm, and it was put thru as a residence…) After dodging 2 separate foreclosure attempts he is now under a Ch12 BK. We have until Feb 4th for BofA to submit their POC. After reading thru how BofA has treated Ch 13 BK’s I think we have to have the fine toothed comb at the ready. So far the re-instatement totals have been pretty straightforward, but we have a history of being very vocal w/ them. I am just dreading what will happen during/after the BK. I am going to ask his BK attorney to read this through.

    1. Nathanael

      Good good good. I’m glad to hear you’re paying attention to every single detail, because BoA is a criminal organization and will attempt to get away with any and all crap it can think of.

      You’ll even have to watch the local legal notices. BoA has attempted to get “sales” pushed through behind people’s backs when there was no foreclosure at all. Fraud piled upon fraud.

  8. dolleymadison

    This both heartening and heartbreaking at the same time…heartening that it is finally seeing the light and heatrbreaking that folks could do this to other human beings just takes my breath away.

  9. steelhead23

    For-profit banks are a menace and should be eradicated. Do as little business with them as you are able.

  10. ex-PFC Chuck

    A true public service on your part, Yves. And the whistle blowers as well. We’ve got to fight anger fatigue.

    1. Shawn

      “Anger fatigue” is a such a great phrase. I’ve heard the term “compassion fatigue” cited before by judges in family courts (apparently they have a tendency to run out of compassion over time and become less merciful/understanding or more reptilian), but “anger fatigue” (or perhaps “outrage fatigue”) seems perfectly suited to these kinds of revelations about the financial industry.

      Definitely looking forward to the next posts in the series.

  11. Jylly Jakes

    Yves and the whistle blowers, THANK YOU! Excellent journalism. I offer two suggestions 1. Let’s get the OIG Audit report released that caused the RAPID collapse of the IFR, if it has not been released yet publicly. 2. Let’s figure out a way to accelerate the regulation of derivatives that allow naked bets for entities without skin in the game. For example, if Brokerage House A purchases a pool of defaulted loans that may or are re performing, don’t let ANY brokerage or investing entity bet against the pool with derivatives unless they own a portion of the pool, or are doing strict, transparent hedging. That’s my two cents. GREAT REPORTING.

  12. jake chase

    As usual, the Devil is in the details. What the banks know is that our legal system is incapable (and uninterested) in doing justice in individual cases. Much of the blame goes to ignorant and stupid and lazy and self inflated judges, who simply do not care about anything except lightening their own workloads and avoiding administrative criticism.

    This phony audit of bank abuses is just what can be expected from a totally corrupt government drunk on the elixir of its own propaganda and manned exclusively by functionaries hell bent on going to the bank themselves. I suspect it won’t be too long before government by propaganda and public relations degenerates into a physically nasty kind. We should all value free speech while we still have it.

  13. Ms G

    This is what real investigative journalism looks like. The level of detail via your interviews with the whistleblowers is a goldmine. Fantastic work from the top down. Thank you.

  14. btraven

    This is a great piece, painfully disturbing–depressing, discouraging. And it’s just one bank in one town. When you think about all the foreclosures by all the banks in all the towns, you gotta wonder: Can something this broken and corrupt even be fixed?

    One thing’s for sure: Yves, you’re just too goddamn smart! If you keep writing shit like this, you’re never gonna get a man.

  15. bob

    It’s worse than I ever imagined, and I’m prone to flight.

    That they were temps is still making me laugh, on so many different levels. I’m not disparaging temps, but maybe proposing that the “temps” completely replace all mangement at BoA.

    -“McDonalds bringing in temps to cook, clean and serve. Current employees are to do their best to discourage such behavior”

    I was an advote, here, in 2008 of buying every single mortage and doing the legwork. We’re going to pay for it one way or another. They are just going to keep holding the mess as a hostage that “no one wants to look at”.

    As it stands, the US paid for all of the mortages, didn’t get any information about them, and had to bring in third party temps to *begin* to tear into this paperless monstrosity. This is high comedy.

    I keep thinking about the emporer with no clothes, but it’s not the people who are naked, it’s the entire “mortgage complex”. Don’t you dare look at that.

    1. bob

      Sorry, spell check not working.

      Anyone else having this problem with Firefox? I can’t get spell check to work in the typing box. It’s “checked” as on, but doesn’t spellcheck.

    2. skippy

      @bob, this is a reality for all securitized debt.

      When you can create something virtual… out of something physical… that carry’s risk into the future ([expectations of future potential – time travel] varying time scales of interest free – interest triggers et al) and off load it on uninformed buyers (supply side cortex injected advertising – information arb)… cutting the umbilical cord of risk at the sellers point… opportunistic shorting… well…

      And yeah we should have bought it all and gone Swedish, agree with you, YS and and others. Although the game is still afoot, those here and other places still persist. Until that changes… the bonfire only grows and grows… they seem impervious… yet my observation is they become more desperate by the day and thou’s of us that have been around the block… know what that entails… eh… Yves.

      Skippy… have cheer all… its just starting to get good!

        1. bob

          Second thought, not true at all. Most fedex guys can get past the receptionist. Maybe we should hire them.

          No bid, cost plus contract to get 100 FBI agents into BoA.

        2. skippy

          Oh bob… don’t go and get all defeatist.

          Today I spammed folks in enemy territory (friends and relatives), MSM, Gov agency’s here down under, talked to and referred this post to some hooked up people in person – explained the mechanics (many said – had an ah ha moment!).

          Skippy… I in ranger pre school was doing like 200 – 4 count leg lifts (like swimming on your back). Now I was almost done and showing some stress, well one of the instructors (half black and native american [scary bloke]) noticed my imperfection… well I became his object of desire. In the end I did more than the allotted amount… with him standing over my head doing the YMCA with my skull as the center piece between his foot movements (you know jumping jacks)… long story short… your – desire – has to_ exceed_ their’s…

          PS. has Yves or the crew given up?

  16. hermanas

    Yves efforts are awesome, her intelligence intimdating. NC is appearing on more blogrolls.
    6 years ago there were 50 homeless children in our county school system, yesterday’s survey revealed 580.

  17. Schofield

    The former Inspector General for Tarp, Neil Barosky, in his truly excellent book on the corrupt administration of Barack Obama makes it absolutely clear that bank relief and not foreclosure relief was the No. 1 priority.

  18. Ms G

    A hugely special thank you to every one of the witnesses (whistleblowers) who spoke to Yves.

    Without you, none of this reporting could happen. It takes certain qualities of humanity, integrity and courage to do what you did, and as these are all in short supply (especially in combination), I have immense admiration for, and gratitude to, all of you, and any that may be standing in the wings.

    Thank you,

    Ms G

  19. Ms G

    The story told by Reviewer A. What the bank and the county did/are doing here is terrorism against citizens. Pure and simple.

    1. dolleymadison

      Ms. G you have no idea…BofA is in EVERY county in the country and in Charlotte, N.C. they set the tone so that ALL the servicers can follow their same twisted playbook and get away with it. The Clerk of Courts – repsponsible to administering the non-judicial FC process in North Carolina – and the Registar of Deeds – responsible for the integrity of the land records for the county – are not only refusing to stop this malfeasance but are aiding and abetting. When I found that my “subsitute Trustee” (actually FC Mill attorney posing as trustee) had filed a Trustees deed before I even had my hearing I went to Registar of Deeds to complain and WATCHED HIM DELETE the recording out of the system, all while while denying it had ever been recorded (I had a paper printout of the recording). The day of my hearing an assistant clerk of courts started the hearing by askign FC MIll “what day they wanted to have the sale” – beofre the hearing ever began. This debaucle may have started at the top – maybe in teh very halls of teh Whitehouse – but it will be destroyed from the bottom up which is why it is is imperitive that we get this article and others out to our local media and court systems.

      1. Nathanael

        Yow. Are your local DAs elected? That sounds to me like the only way to get anything done. Elect a DA who will prosecute the Recorder of Deeds et al.

  20. Melissa

    Again, this is absolutely unprecedented reporting! Yet, this is just the tip of the iceberg, in the whole mortgage scandel. These articles are brilliantly illustrating the full scope of the fraud that continues to this day. How do you fix something like this? It’s like trying to rehabilitate a serial killer.

  21. indio007

    We all know the banks need some tier 1 capital. Why pay fair value when you can get it on a credit bid at a wrongful foreclosure sale? Thx for this Yves, it’s stomach churning but necessary.

  22. Susan the other

    I almost didn’t read this series. Burn out, I guess. But so glad I did. This is what I believe should be happening. Only Yves can do this because she has the mental agility to untangle it all. You don’t see any “bank analysts” out there trying to make sense of their own mess. So Yves can match them all in terms of complexity, and she has an even better gift – she can explain it! It might take time but in the end we will all be emancipated from the banksters.

  23. Bridget

    What a cluster****.

    Excellent work on a particularly outrageous subset of the whole “devolution” post a few days back. You simply can’t create legislation or regulations or rules and throw a bunch of money at a problem and expect anything beneficial is going to happen.

    With the implementation of the far more ginormous horror show in waiting (aka Obamacare)on the horizon, I know with a certainty that similarly dispiriting posts are in the offing for years to come.

  24. Jim S

    Looking forward to the rest of the series. Sadly, in my everyday life I only know a couple of people remotely interested in these goings-on, but I’ll impose this on them whether they like it or not.

  25. Ray Phenicie

    The mortgage and foreclosure situation now needs its own short history: about 100 pages of documentation from when the whole mess began. 2007 is accepted as the official beginning, however, Wikipedia shows a housing bubble starting in 1998.

    The same page has this entry
    1993: The Federal Reserve Bank of Boston published “Closing the Gap: A Guide to Equal Opportunity Lending”, which recommended a series of measures to better serve low-income and minority households, including loosening income thresholds for receiving a mortgage, influencing government policy and housing activist demands on banks thereafter.
    Can you say ‘Targeting minorities and low income folks?’

    Or course there was the S & L crisis of the late 1980’s and that did not happen overnight but might be a good place to begin. William Black knows a lot about that doozy. The reason I’m going into this is that we now have a consistent picture of a government that is using the mortgage, real estate and finance industry as a way to hoover up wealth into the top 0.6% who then make off with the cookies as well as the jar, the kitchen and then the whole house.

  26. Nathanael

    “when a bank completes all the steps up to the sale of the home, including evicting the borrower, yet neither takes title itself nor sells the property to a third party.”

    This is clearly illegal in every state in the union, at least title theory and lien theory states.

    The bank has to take title *before* eviction.

    Otherwise, it isn’t the owner, and can’t evict anyone. How the hell do they get the evictions through?

  27. Chris Engel


    If only there was some direct link high up so we could get some of the people responsible for the incentives of the entire conspiracy.

  28. Kristina

    I submitted a claim to the IFR and was so disappointed in this settlement. I was dual tracked by BofA in 2010… Put through months of “lost documents” or “please bear with us, we are backed up”… Paid on trial mod for 11 months before payment was refused due to “missing documents”and I was sent to foreclosure. Or they would try to herd me into predatory in house mods… Spent a nightmarish year and a half trying to rectify it all and almost lost my mind…certainly had lost my credit. Every idiot you talked to at the bank was worse than the previous..they lied constantly or just wrote BS QWR in response to anythingmi escalated. I was told I was talking to “office of the CEO and president” but then discovered this was just more bullshit. Trying to find out why I was declined when I should have been modified and…fighting foreclosure at the same time….. If Hawaii hadn’t have changed their foreclosure laws in May 2011 I would be living under a palm tree. My foreclosure was canceled and i reapplied for HAMP…for at least the 20th time….Well in sept 2012 i finally got my mod…but after they had tacked on at least $20-30k in extra unexplained fees and attorneys’ costs. They had essentially billed me for all thier delays and stalling….The bank put me through hell and then booted me in the bum with a new mortgage that is waaaaaaaaaay more than the original note and I will be 94 when paid off. And they think they did me a favor!!!

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