Naked Capitalism is running a series of posts describing the ugly truth
behind the now-defunct Independent Foreclosure Review. Whistleblowers
from within Bank of America have exposed massive harm to borrowers and
an attempt to cover up the harm and other flaws in the process.
Although the official line given for halting the reviews was that they
were not exposing significant amounts of harm to borrowers, five contract
workers at Bank of America tell a different tale. From the
executive summary of Naked Capitalism's report:
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
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: 100% harmed, with 80% suffering serious harm
These figures represent the amount of harm that five reviewers found throughout
their tenure with the Independent Foreclosure Review. As you can see,
the official story is highly suspect.
The Naked Capitalism investigation has uncovered many systemic issues that
caused many borrowers to lose their homes. For example, the reviewers
indicated that borrowers were often stuck in perpetual loan modifications.
This was largely due to the fact that Bank of America didn't have
systems in place to properly track the loans and because no real effort
was made to ensure that data was correct.
Reviewers also found that banks were holding borrower funds in suspense
accounts for almost two years -- a reasonable amount of time is normally
15 days. These amounts were often misapplied to borrower accounts. These
misapplied payments then caused more problems with loan modifications.
Improper fees and charges were being rolled into the capitalized amount
of a loan modification, which inflated payments and ultimately made many
modifications unattractive for borrowers.
Reviewers also uncovered improper fees being applied in bankruptcy, titles
that were left open for years after the house was taken, and other abuses.
read more in part 2 of the series. In my next post, I'll cover parts 3 and 4 of the investigation.