Whistleblowers Reveal Orchestrated Coverup With Bank Of America Foreclosure Reviews

As usual, Yves Smith does the journalism community a favor by digging into the details of the underbelly of finance.  The latest story at Naked Capitalism involves the coverup surrounding the Bank of America foreclosure reviews which were halted by the OCC and Fed in favor of a $8.5 settlement whitewash involving major banks and servicers.  NC interviewed five contract workers who were working at the largest Bofa review site, Tampa Florida.  Part I of the NC piece reveals what the five reviewers estimated to be borrower harm relating to the abuses by Bofa:

Reviewer A: 90% harmed, with 30% to 40% suffering serious  harm

Reviewer B: 30% harmed, including instances of serious harm;  described multiple instances of serious harm on other tests performed on his  borrowers but could not readily quantify

Reviewer C: 67% harmed on his test; like B, saw multiple  instances of serious harm in the borrower history not captured on his test as  harm; could not readily quantify but specific examples cited during interviews  alone exceed 10%

Reviewer D: 95% harmed, with 30% to 40% suffering serious  harm

Reviewer E: 80% sufferd serious harm

Part II of the NC piece expand on the abuses with reviews explaining just how widespread the abuses were.  Yves uncovers how Bofa dual-tracked borrowers, failing to record potentially viable modifications while simultaneously foreclosing on the borrowers and racking up piles of fees in the process.

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.

Yves latest bit of journalism magic helps explain why the banks were indeed thrilled with the $8.5 billion settlement.