Bank of America Bombshell: Whistleblowers Reveal Orchestrated Coverup and Massive Borrower Harm

Published on AlterNet.org, by Yves Smith of Naked Capitalism, not dated.

On January 7, 2013, ten servicers entered into an $8.5 billion settlement with the Office of the Comptroller of the Currency and the Federal Reserve, terminating a foreclosure review process which was set forth in consent orders issued in April 2010. Borrowers who had had foreclosures that were pending or had completed foreclosure sales in 2009 and 2010 could request an investigation by independent reviewers, selected and paid for by the servicers but subject to approval by the OCC … //  

… Yet the foreclosure investigation was halted abruptly, with the OCC and the Fed failing to identify any methodology for how the portion of the settlement allotted to cash awards, $3.3 billion, would be distributed to homeowners who might have been harmed in 2009 to 2010, an astonishing lapse that will almost certainly result in small payments being made to large numbers of borrowers, irrespective of whether they deserved vasty more or nothing at all.*

But except from its hamhandedness, this outcome was no surprise to astute observers. The OCC consent orders had been launched in an unsuccessful effort to render the ongoing 50 state attorney general/Federal negotiations moot. Critics described how these orders were regulatory theater, with Georgetown law professor Adam Levitin comparing them to promising in public to spank a child, then taking him indoors and giving him a snuggle. Leaks during the course of the reviews confirmed these concerns, revealing deep-seated conflicts, limited competence among the review firms, half-hearted efforts to reach eligible homeowners, and aggressive efforts by the banks to suppress any findings of harm.

As grim as this sounds, the conduct was worse than the leaks suggested. After extensive debriefing of Bank of America whistleblowers, we found overwhelming evidence that the bank engaged in certain abuses frequently, in some cases pervasively, in its servicing of delinquent mortgages. This is particularly important because Bank of America has been identified in previous settlements as far and away the biggest mortgage miscreant, paying over 40% of last year’s state/federal mortgage settlement among the five biggest servicers.
(full text).

Links:

Interview with Volkswagen CEO: European Auto Crisis Is an Endurance Test, on Spiegel Online International, February 13, 2013: The European automobile market is struggling and many manufacturers face falling profits. Volkswagen has suffered too, but CEO Martin Winterkorn notes in an interview with SPIEGEL that profits are still strong. He also defends his salary, which is among the highest in Europe …;

GEAB N°71 is available! United States, March-June 2013 – Unpluggig the world’s sick man: last impact phase of the global systemic crisis, on GEAB no. 71, January 16, 2013;

Why Congress Must Allow Students to Refinance Their Loans, on AlterNet/Education, by Julie Margetta Morgan, January 29, 2013: Buried under a trillion dollars of loan debt, students need action from the federal government to change the way student loans are financed;

Oscar-Nominated ‘Amour’ Raises Red Flags on Age, Illness and Poverty: The ravages of old age are hard enough when you’ve got ample resources. What if you don’t? on AlterNet/Culture, by Lynn Stuart Parramore, February 4, 2013;

The next generation must know, received by e-mail: In 2015, the doors will officially swing open to the Smithsonian’s new National Museum of African American History and Culture.  From the early days of slavery to the first African American president, generations to come will uncover a treasure trove of our nation’s history all under one roof. If you value preserving our past, you’ll want to sign NMAAHC’s virtual guestbook (of the National Museum of African American History and Culture NMAAHC / Smithsonian museum) today and stay informed on the museum’s progress. Don Hazen, Executive Editor, AlterNet.org;

Why the pope quit the papacy so abruptly, on Intrepid Report, by Jerry Mazza, Feb. 13, 2013.

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