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Lawsuit: BofA gave bonuses, gift cards for meeting foreclosure quotas

By Hugh Son and David McLaughlin
Bloomberg News

NEW YORK Bank of America Corp. rewarded staff with cash bonuses and gift cards for meeting quotas tied to sending distressed homeowners into foreclosure, former employees said in court documents.

Mortgage workers falsified records and were told to delay U.S. loan-assistance applications by requesting paperwork that the Charlotte-based bank had already received, according to statements from former employees filed last week in federal court in Boston. The lender improperly disqualified applicants to the Home Affordable Modification Program, according to a statement May 23 from Simone Gordon, a loss-mitigation specialist who left the company in 2012.

“We were regularly drilled that it was our job to maximize fees for the bank by fostering and extending delay of the HAMP modification process by any means we could,” Gordon said. Managers instructed staff to “delay modifications by telling homeowners who called in that their documents were ‘under review,’ when in fact there had been no review,” she said.

The bank has denied the plaintiffs’ allegations.

Bank of America, which has spent more than $45 billion to settle claims tied to its 2008 takeover of Countrywide Financial Corp., is being sued by homeowners who didn’t receive permanent loan modifications after making payments under trial programs, according to court papers. Statements from seven former loan employees were included in a filing last week as part of plaintiffs’ attempt to gain class-action status.

Bank of America has helped the most homeowners under HAMP and is committed to assisting customers at risk of foreclosure, Rick Simon, a company spokesman, said Friday in an email.

“At best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees,” Simon said. “While we will address the declarations in more depth when we file our opposition to the plaintiffs’ motion next month, suffice it to say that each of the declarations is rife with factual inaccuracies.”

The lender unsuccessfully tried to dismiss the complaint in 2011. U.S. District Judge Rya Zobel ruled that the case could proceed while dismissing some claims.

Loan collectors who put at least 10 customers into foreclosure, including those who were in trial modifications, were given $500 bonuses, said Gordon, who worked at Bank of America for more than four years. Other rewards included gift cards for retailers such as Target and Bed, Bath & Beyond, she said.

Theresa Terrelonge, another former employee, said loan officers were given restaurant gift cards and $25 cash awards for denying loan applications. The incentives moved workers to reject applicants improperly, Terrelonge said May 15 in a statement.

“I witnessed employees and managers change and falsify information in the systems of record, and remove documents from homeowners’ files to make the account appear ineligible for a loan modification,” said Terrelonge, a loan servicing representative. This allowed managers to meet quotas for closed cases, she said.

Bank of America instructed employees to delay applications and mislead customers “as part of a deliberate practice of stringing homeowners along,” lawyers said June 7 in a filing.

Attorney Steve Berman of Hagens Berman Sobol Shapiro said in a court filing that the law firm is in contact with more than 1,000 Bank of America customers who said they completed requirements for a trial and were denied permanent modifications.

Lawyers supported their claims with declarations from the seven employees, many of whom said they had access to the bank’s software, which allowed them to understand the process.

Bank of America was among five mortgage servicers that reached a $25 billion settlement last year with the federal and state governments to resolve claims of abusive foreclosure practices. The deal provided monetary relief to homeowners and establishes standards for servicing mortgages.

Those rules restrict banks from foreclosing on a home while a borrower is being considered for a loan modification and set procedures and timelines for reviewing loan-modification applications from homeowners.

New York Attorney General Eric Schneiderman said in May that he intended to sue Bank of America and Wells Fargo & Co., the largest U.S. mortgage lender, for violating terms of the settlement related to processing modification applications.

Bank of America said last month that New York’s claims are “entirely baseless” and argues that under the settlement, the state has no right to file an enforcement action against the company.

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