This post continues our discussion of how Bank of America and its consultant, Promontory Financial Group, made concerted efforts to ignore and suppress evidence of harm to borrowers who asked for what was supposed to be an independent review of their foreclosure.
Overview of the Bank of America Foreclosure Review Series
As we described in earlier posts in this series (Executive Summary, Part II, Part IIIA, Part IIIB, and Part IV), OCC/Federal Reserve foreclosure reviews meant to provide compensation to abused homeowners were abruptly shut down at the beginning of January as the result of a settlement with ten major servicers. Whistleblowers from the biggest, Bank of America, provide compelling evidence that the bank and its independent consultant, Promontory Financial Group, went to considerable lengths to suppress any findings of borrower harm.
These whistleblowers, who reviewed over 2500 files and tested hundreds more in the attenuated start up period, saw abundant evidence of serious damage to borrowers. Their estimates vary because they performed different tests and thus focused on different records and issues. When asked to estimate the percentage of harm and serious harm they found, the lowest estimate of harm was 30% and the majority estimated harm at or over 90%. Their estimates of serious harm ranged from 10% to 80%.
We found four basic problems:
The reviews showed that Bank of America engaged in certain types of abuses systematically
The review process itself lacked integrity due to Promontory delegating most of its work to Bank of America, and that work in turn depended on records that were often incomplete and unreliable. Chaotic implementation of the project itself only made a bad situation worse
Bank of America strove to suppress and minimize evidence of damage to borrowers
Promontory had multiple conflicts of interest and little to no relevant expertise
We continue our discussion of the third major finding below.
Concerted Efforts to Suppress Findings of Harm
In our last post, we covered five approaches Bank of America used to reject or minimize borrowers’ claims of abuse. They made it difficult for a homeowner’s charges to get through the review gauntlet.
In this post, we will add these devices to the list:
Rejecting claims entirely and subjecting others to only a limited review
Pulling files from reviewers if they were finding harm
Refusing to consider institutionalized abuses, including extortion and psychological abuse
In addition we will provide more evidence of the most troubling charge made in our last post, that Bank of America fabricated documents during the reviews.
Rejecting claims entirely and subjecting others to only a limited review. As discussed previously, Bank of America and Promontory structured the foreclosure claims review as a series of tests, A through H, paralleling the requirements of the OCC’s consent order to Bank of America. However, all test were supposed to be performed by the independent reviewer, Promontory. As we discussed at considerable length in our earlier posts, the evidence overwhelmingly shows that the bulk of the work, test A through G, were done by Bank of America through a large staff that it assembled, consisting mainly of temps (see Appendix I and Appendix II for details).
Two preliminary tests, test O and test S, often undermined homeowners’ chances of getting a fair review. Both were performed by the least capable reviewers, the so-called Level I claim reviewers, who typically had only clerical and computer skills and little to no knowledge of the mortgage business.
The O test was to ascertain whether the borrower was eligible for a review at all. Some parts of that test were legitimate, such as determining whether the borrower’s mortgage had indeed been serviced by Bank of America. But others looked like a deliberate effort to remove claimants from the system. For instance, some borrowers had claims rejected before the tests B through G had even been finalized. In some cases, the rejection letters asserted that Bank of America had no information about the loan in question, when in fact they had been originated by Bank of America and investor reports showed that they were still being serviced by Bank of America. That makes the “no information” claim impossible.
Borrowers who did get past the O test could still be rejected through what internally was called a “one and done”. For four of the tests, borrowers have their complaint considered only if a foreclosure had been completed. Yet the OCC consent order explicitly included not only foreclosure actions completed during 2009 and 2010, but foreclosure actions underway then as well. Yet borrowers could suffer significant harm if a foreclosure had begun and was not completed. For instance:
Reviewer G: Well, and considering, like I can think of one specific case that Promontory reviewed one of my files… It had gone from the C reviewer to our quality control at Bank of America, and then from there to Promontory, and then it came for the G test to me, and I caught it, and like, how did – they did what they called a “one and done,” meaning they looked to see if there was a foreclosure and there wasn’t, so they considered it a one and done, which meant they didn’t order any legal documents. Because in test C you have to look for all legal docs– you know, make sure that they were, um – I actually need to think about this now – make sure that they were given the right notices, you know, in the time frames and that their notice of default was sent, the breach letter, all these things were done in the allotted time frame.
RG: Well, when it’s a one and done, they don’t do that because they said there’s no foreclosure so there’s no reason to do that. Well, and this particular case was a foreclosure. It not only was a foreclosure, but it went to the state attorney and then it was reversed. They rescinded it.
So by the time – by the time – what had happened is, and there’s like logs, you know, of the call, and this lady happened to call in, and I’m not exaggerating, she – I think she must have probably set up a reminder in her – like I do – in my Outlook and it pops up every two weeks or 10 days or whatever it was, and she would call in religiously, even though they would tell her, “You know, it’s going to take 30 days, you don’t have to call back” – she would still call back, and kept calling back. And there would be notes that she’d call back and hear, “It’s still in the review, it’s still in review, it’s in underwriting for review,” you know, all this stuff. And then finally it comes to this – it came to, I think it was December 17th, if I remember right. She had called in and she’s asking what’s the status of her modification, and they go, and the person says, “Ma’am, you can’t get a modification, it’s an REO property.” [Real Estate Owned, which means the bank has already foreclosed on it]
RG: That’s exactly. She’s like, “What is an REO property?” Now I had read these all in chronological order. I started at the bottom, read them straight up, and I did the exact same thing you just did. I’m like, “What?! Where did I miss this?” She’s calling in, and now, keep in mind, she also had, she’s making these trial payments by auto debit. Auto debit. They had been debiting her account for all these payments and the girl says, “Ma’am, your property went to foreclosure sale in September.” Now they had taken her September, October, November and December payment. And yet they foreclosed.
YS: How could they have done a foreclosure when she’s still living there? How c– she wasn’t evicted?
RG: Exactly – well, they hadn’t done the eviction or anything yet, and –
YS: Oh my God.
RG: I know…And she ended up, January, like January 7th I think it was, because this was December 17th – holidays – she ended up filing bankruptcy to keep from being evicted.
RG: And so when I catch this case in G test, because, you know, when this – because we had done Cs before this and done G, and everything’s, you know, in C, “Oh, they’ll catch it in G.” You know, if something – and then in G, it’s “They’ll catch it in H,” I think. And I’m like, I don’t understand. So I go to my manager and I say to him, “This is a case that was done as a one and done.” I said, “It’s not a one and done,” and I explained the whole thing to him, and he says, “Well, let me review it and I’ll get back to you.”….
So he comes to me and goes, “It’s okay, because there’s no harm done to her, because ultimately she got her modification.”
Because I said, “Well, wait a minute. The C reviewer missed this. It went to QC [quality control]. QC missed it. Promontory reviews it and their notation is, “Borrower is currently in a modification.” Well, because when they reversed it, rescinded it, they put her in a permanent mod then. So by the time Promontory reads it, they’re seeing – all they looked at was that she was in a permanent mod at the time. Not that she had gone through all this prior to that. And I said, “How can you say there’s no harm?”
YS: Yeah, the expense and the credit score damage and going through – [crosstalk]
RG: The credit score, everything. The expense of hiring an attorney to do the bankruptcy, all this stuff. And I said, “How can – ” Because ultimately – she goes – here’s what his quote unquote words were: “We don’t know that’s why she filed bankruptcy.” And I said, “Why do you think she filed bankruptcy? She went through this whole thing for two years so she could file bankruptcy? No. That is – come on.” I said, “What, within less than 30 days she filed bankruptcy of finding out that they had foreclosed on her house? Give me a break.” And I said, “It’s still we don’t know that she was noticed [given notice a foreclosure started]. We don’t know that they did the breach letters, all that stuff, because the legal file was never ordered.”
Another issue was a second test performed at the outset by the Level I reviewers called S test. That was to tag the complaint for particular tests. For instance, if a borrower letter discussed fees, it would go for tests E and F, which looked at the level and frequency of fees. But the onus was on the borrowers to write his letter in a way that it would be flagged for the proper tests. As Reviewer E explained:*
I was on E and F test, and some of the time I’d see borrowers who should also have been reviewed for bankruptcy (tests B and D), I could see a bankruptcy in the record, and often questionable activity around it in the notes. But that didn’t fall in my review scope. I’d tell my team leader and unit manager that the file needed to be sent to get a B and D test. They’d always say, “Just send it on. Promontory will take care of that.”
I’d keep an eye on the audit notes [reviewers could see what happened to their files after they had completed their work] Promontory never did those tests.
And some of the ways “no harm could be found” were more sophisticated. From a reviewer on a different set of tests:
Reviewer F: The woman was in the middle of modification and she sent up her up-front funds. Her husband had cancer. They were modified, on a perm[anent modification], and she was making her payments. And I went into the payment history and everything was there with her payments, and she had called in to see if she could get an extension for one 30-day of her modification, and they said no, and she had went ahead and paid it on the 28th and they started the foreclosure proceedings on the 30th, and she was – that was the only payment she was late on. In her permanent modification they foreclosed on her.
RF: She lost her home. She lost her husband and then she lost her home two months later…She wasn’t even 28 days late. She was 15 days late…
I would have to say – and the way the questions were worded, it was very difficult to answer…The way that the question was written for you to answer it, there wasn’t a part that you could like, okay yes, this was okay, but B, they failed to comply was this, and you couldn’t break that out. So it had to be a yes or no answer, so you couldn’t have a two-part, like an A and a B or anything like that. You couldn’t put in your comment. So you have to put in your comments such as like, like with the individual with the trial modification. She completed a successful trial modification, called in 15 days later on the 28th to make a late payment or to do some sort of a payment arrangement, was denied, and 30 days later – she was on a perm and denied and then, you know, foreclosed on 30 days later. Two months later she was out of her home, evicted out of her home. That’s how quick they moved. So it was like, there was not enough, not enough categories to allow you to elaborate in there and answer the question, so if you answered the question as no, then it would take you and waterfall you down. There was a lot of waterfall issues with Test G [the test on modifications].
“Waterfall you down” means if you answer the question a certain way, you are directed to skip questions (“if ‘no’, go to Question 30”). So in this case, with the woman foreclosed upon based on a single 15 day late payment, the reviewer could not answer a two part question accurately. If she said “no” (as in the “no harm” answer to both) he’d be directed to skip over questions that were relevant (say details related to the foreclosure). But if he answered “yes”, she was certain to have her response rejected by Quality Assurance.
And not only was the test structured to limit how the reviewers could answer questions, they were also given too little space:
RF: CaseTracker, CaseTracker for one, which is a Promontory system that we had to use and we uploaded everything into, and then we also had our issues where in AS400, which was the bank system that we had to use, that notes would then be cut off. There would not be enough notes. We could hit the, you know, F4, F12 to get more notes, but there were no more notes, you know, to retain in there.
YS: So it would only allow you so much space to record your problems, and there typically often wasn’t enough room.
RF: It – yeah – right.
Pulling files from borrowers if they were finding harm. If you had any doubts that the low-level Bank of America contractors and employees were doing the reviews, the fact that management was so aggressive in its efforts to influence their work should dispel any doubts. We’ve discussed earlier how Bank of America would send all reviews to a “quality assurance” department under its control that would routinely push back if a reviewer found a borrower had been hurt. But since those objections would be sent back to the reviewer for a rebuttal, more effective methods were implemented:
RF: Our managers, our team managers, are the ones that placed these loans in our queue. Because if we weren’t going to be a team player and we were going to say, “Nooo, I think that’s harm, that’s harm, that’s harm” – if I wanted to be adamant about it and, you know, tell him, “No, that’s harm, this is harm,” and they’ll start taking those away and start giving me other loans. If it gets too hard and I’m finding harm, they wouldn’t give it to me. They would find another loan. And they would pass that off to another person [crosstalk]
YS: Oh, wowww.
YS: So they were cherry picking your loans.
RF: Absolutely. And we started t– (angry laugh) we started taking notes and – let’s see, [person A], [person B], there were several others that we started speaking about and speaking through here about how, why are they starting to give us the loans? “I put seven loans in there sending into your queue,” or “I put 10 loans into your queue.” So I kind of like went along with the managers, nice, cordial, no upsets or nothing like that. I just did my job. And when I found harm, they would pull that one away from me. And I would have harm in there and they would pull it out of my queue. So I would like go to work, have it, work on it, and then all of a sudden if I said anything, that, you know, “Listen, look at this one with me,” they would pull it the next day. “Oh, I don’t know, you know, they were doing some revamp. We don’t know what happened to it.” We’d lose the loan.
YS: So if you started chatting with your colleagues about a really ugly loan, they would yank it before you completed the review.
RF: Yes. Yes.
Refusing to consider institutionalized abuses, including extortion and psychological abuse. It is not an exaggeration to call some of the abuses some hapless borrowers suffered extortion. As Reviewer A explained it:
I do remember a case where a collections person in the BofA collections department had instructed a person that to get modification help they needed to send a $6000 payment and bring the loan current. When the mod team responded to the collecter that the borrower had made a payment to the collection department and not the mortgage department and were now current and could not be helped, I remember the collector stating that he was there to collect and that was his only job and he mentioned he had gotten his (they were on a commission in the collection department).
I did read other instances of collectors taking payments, getting their commissions and then, whether through ignorance of the procedure or just meanness placing the funds in a suspension account and not making proper notes, or notifying the right departments. While most were not as vicious in the notes as the case above, it was common (10-15%) of the time that a collector would take a payment that they shouldn’t have and then not process it to proper channels to the mortgage/modification department.
Often times those payments were not even credited to the mortgage department at all. They would actually be placed in a collections suspense account for weeks until someone figured out where it belonged and how it would be credited. The biggest or at least the worst part of this was that the collectors would do their best to keep these borrowers calling them back. They would tell these borrowers to call them back for ‘special instructions’ and tell them to make payments to them and have them schedule regular monthly payments thru the collection department systems for autopayments and so on. Then after several payments the borrower would realize that their payments weren’t getting credited as they thought they would be and then once the complaints started the borrower would be forwarded to the right mortgage department personnel to get the real ball rolling. At that point it would be anyone’s guess how the payments in the collection suspense account would be posted in the mortgage department. It was a mess.
While this reviewer labeled this behavior as borrower harm, it did not fall within the normal scope of G test, which meant that other reviewers were unlikely to flag it. And predictably, the reviewer had the Quality Assurance department contest these findings.
Another reviewer was disturbed by how some of the notes showed psychological abuse:
RF: But there again I’m telling you, the notes that I read were just horrendous notes that what bank management – Bank of America management would tell these account reps or customer service reps or whatever they’re called, what they would tell them. You know, “My manager said, ‘No, we cannot do this, you missed. You know, ‘Pack up, move out, you’re losing your home.'” Those situations I got – I had the hardest ones. It was like a team of seven of us that we got the most difficult ones, and the managers were…becoming very friendly with us? That we had to – you know, they were coming and standing at our desks a long period of time. They were coming in, you know, asking, “Is everything okay? How’s that loan going? You’ve been on it for a couple of days.” Stuff like that. Those were the, those were the issues that we were seeing. And it just kept going on and on and on.
YS: Wow. So you’re basically saying that in addition to QA the management was trying to manipulate you just by being nice to you, like they knew you had the ugliest cases –
YS: – so they were trying to sweeten you up?
More evidence that Bank of America fabricated documents during the reviews. The reviewers provided persuasive evidence that Bank of America was creating documents to fix problems the reviewers had unearthed.
RG: So, like on this test I was talking about. For instance, one, we don’t know whether they ever breached them [sent the borrower proper breach letters which notify them they are delinquent and the bank will foreclose unless they take action]. Did they send them a notice to tell them they were behind, this is how much they owed, and this is where to send your payment to catch up on all your payments. We don’t know if they ever did that, because we had no legal documents ordered. Then they had to file the notice of default. Was it filed 30 days after? We don’t know because we don’t have the breach [letter]. And in a lot of cases, a lot of them, a lot of these files we couldn’t complete because we had to wait – we didn’t have breach letters in the file. And so they were all put on hold.
We would hold them and hold them and hold them. And then all of a sudden – you know, we’re waiting two and three months for these breach letters. All of a sudden one day we come in and, lo and behold, our RFI [Request for Information] team found all these breach letters. Hundreds! Hundreds of them overnight. And they all looked the exact same way. And they weren’t like the breach letters we had been seeing. They were sent to “Dear Customer.” Not “Dear Mr. and Mrs. Jones” at such and such address, it was “Dear Customer” at this address. And then there’s this, and then, you know. They were supposed to have I think seven specifics to make it a legal breach.
RG: And so whoever did it, didn’t make it. Barely. They didn’t even have five in some cases, five of the legalities. So, but, we were told, “No, these are right. Go ahead and use them.” Well, one of the managers that was there, he …. I want to say I think he came from Fannie or Freddie or something. And so we called him over, because he was a team manager, and I said, “Patrick, look at this breach.” And I said, “And the thing is is it had a Bank of America logo on it. But it’s a Countrywide loan number.” So, I mean they didn’t even do it right. And the Bank of America logo is the new Bank of America logo, not the Bank of America logo they had back in 2007.
YS: Oh my God.
RG: I know! It’s so – and Patrick took a look at it. He was pissed. He was so – you know, he was the one mana– that he did kind – he had – he was just very ethical about things, a lot like [another reviewer]. Very much like [another reviewer]. Like, no, this is – and he said, “Send that to me.” And so I did, and I don’t know what they did with it exactly, but probably a week later we were told we couldn’t use those anymore. Because we don’t know – you know, they’re missing some i– yeah. They’re missing some of the points. And which, [another reviewer] brought that up right away, coming from a law office, he said, you know, “You don’t have where to make these payments to. You’re telling them that they’re in default for this amount of money but you don’t tell them what they have to do to pay it and where to pay it to.” So, that’s when they finally – you know, but of course we brought that up right away, and of course we were told, “No, no, no,” and then a week later, “No, you can’t use it.” But they were all – and they all suddenly disappeared. All those ones were no longer out there. They could no longer be accessed.
So it looks as if someone attempted an inept document fabrication and had to pull back the botched output. Reviewer F had another example:
YS: One of the people on E and F tests alleges that he saw that documents were fabricated over the course of the test. Did you see any evidence of anything like that?
RF: I could say that I had questions about documents.
YS: Okay, can you explain where you saw things that you thought were questionable? Examples?
RF: Um, well – like the modifications that they would have, they had one modification that I would ask for, and it was not at all in there. And then I would ask for it and then it looked like it was scratched. It never matched any of the other signatures with any of the other documents that they had sent in, but the one document that I needed for them to see that, you know, where it would sway where there was no harm, that was the document that I would receive from the RFI [Request for Information] team….We would have to have the RFI team go after them, and it would sit in my queue for weeks before I’d get it back.
And I could tell you the documents, you could see the difference in the signatures of – and I’ve been in title and closings for, I don’t know, I did that for 12 years before I went into banking, financial and stuff, but it was just, it’s just – you can tell a signature, whenever a signature is fraudulently signatured on there, you can tell when it’s signed differently. I saw that a couple of times. And I questioned those to my manager…
YS: Can you just unpack that a little and explain…why don’t you just walk me through an example.
RF: Okay. Modification, that they were on a trial and then it was time for them to have a perm[anant modification], and they were to go on a perm – those documents were fabricated. They would have those fabricated with their signatures on them that they signed though because they didn’t have them, to go along with the time frame that they offered them the perm, when in the RFR [Request for Review] claim form it would say that the borrower never received a perm modification….it was making us think that their, the claimer, the claim, um, the client, the borrower, is lying about they never, you know – they did get a perm, we see their signature, that kind of thing. And we would have to wait and hold those for weeks for the RFI team to get them to us.
YS: Right. Right. Right. Okay. Okay. Okay. Because that’s pretty serious.
Reviewer F also found instances where servicing notes appeared to have been scrubbed and that he and therefore pretty much anyone could add to the notes:
RF: And there’s – and then also in their systems, in the bank systems, we had lack of notes. Notes would be cut off. Where it started from Countrywide and came over to Bank of America, where the problems where there was notes concerning modification, the borrower had called in, spoke with an individual concerning modification, needed up-front funds of $4,000 – they would have that in that system but then there would be nothing else after that as to did Bank of America or did Countrywide send out the package? Did the borrower? And then all of a sudden we would have these documents that would show up that the borrower had all these papers in there that they did submit at the time, but there was no notes concerning how they obtained them, at what time frame they came in – it was just a poorly executed gathering of details. Communication logs.
YS: So when the notes were missing for the borrower, was it typically a time issue that they would start at the beginning, or was it more like there was a limitation? Like, it seemed like there were so many words they could take in notes and it would get arbitr– you know, similar to CaseTracker, there would be a certain amount of notes [crosstalk]
RF: Actually it looked like it was just – no, it looked like it was just like cut off, deleted out.
YS: Oh, wow.
RF: It – yeah. And with myself, with my background with knowledge in technology, I actually played around with that system, very much so, and I was able to put in notes, which –
YS: Oh, wow.
RF: – should never have been –
RF: Yeah. Into the bank system. Yeah.
RF: So there could have been, you know, like there was potential, you know, right there that anyone could have put in – I mean, anyone if they had been there that had a foreclosure, let’s say, that may have been or may not have been working – that may have been working there on the project, they could have put their notes into that system, because it allowed us to – so it wasn’t a really good fail-safe system. Anyone could type in a note and it would show up in their AS400, their Home Base system, and their Home Saver system.**
Recall that we discussed in our last post that Bank of America claimed that AS400 was its “system of record” and that information in it should be given priority if there was a conflict between it and other information, such as documents. Reviewer G got similar instructions, that if he could not find anything substantiating a note in AS400 (say that copy of a letter that was supposedly sent) he should still accept the note as true. This is further proof that here was no pre-existing, internally consistent, complete and provably correct account of a customer and his loan in the Bank of America systems. This meant the reviews were doomed before they even began. And it also means the real problem of servicing, that of defective systems and procedures, remains unaddressed.
*Throughout this series, all whistleblowers are referred to as male irrespective of gender.
** Home Base and Home Saver are two subsystems in AS400.