A story posted late Sunday night on Bloomberg.com paints a grim picture of how Bank of America and its contractors – particularly Urban Lending Solutions (ULS) – treated troubled homeowners most in need back in the worst days after the housing bubble burst.
The story charges that homeowners – especially those getting VIP help from members of Congress or other higher-ups – were tricked into thinking they were dealing with the actual CEO of Bank of America.
The charges? Homeowners in need were stalled with repeated requests for the same paperwork or forced to deal with incompetent employees, resulting in delays that sent homeowners into foreclosure, pricier loan mods, and into debt from thousands in fees.
Homeowners were given the runaround in so many ways that it was a major factor in why only 13% of 6.9 million who applied for the federal Home Affordable Modification Program (HAMP) actually had their mortgages modified as the program intended, the story says.
There was, the story charges, foot dragging, dual tracking, intentional inaction – just a whole lot of throwing wooden shoes into the machine works to the detriment of troubled homeowners.
A great deal of reporting went into showing what looks like the worst of the worst practices, and kudos for that. It was a great piece of investigative digging and it would have been a great story…back in 2010 or so.
Coming out a few weeks before New Year’s 2014, it’s just picking at a scab well on its way to healing. At best it’s old news. Great details about old news, mind you, but ancient by financial journalism standards and sloppy in other ways.
The story makes it unclear what the time frames were and are for all this malfeasance, leaving readers wondering if these practices continue or what.
We called Joseph Smith, monitor of the National Mortgage Settlement, who told us this.
"The allegations you mention refer to the very issues that led to the negotiation of the National Mortgage Settlement, which went into effect in February 2012," he said.
"As of October 2012, the servicers party to the National Mortgage Settlement were required to implement more than 300 new servicing rules that improve their treatment of distressed borrowers. As monitor, I use 29 metrics to test the servicers on their compliance with these rules. Additionally, I will start testing the servicers on four new metrics in 2014 to better hold them accountable on borrower treatment regarding the loan modification process, single point of contact and billing statement accuracy."
That’s not to say everything has been fixed, and of course, there are compliance problems.
"My latest report showed that the servicers have made progress but improvements are still needed to fully comply with the National Mortgage Settlement and to regain their customers’ trust. My team and I continue to conduct rigorous oversight and I look forward to reporting additional findings as this important process moves forward," Smith said.
Almost always, the more heart-wrenching and detailed the anecdote, the less substance there is. Here, the story opener is on a homeowner, Isabel Santamaria, who says she was led to believe that she was dealing with BoA’s CEO, when in fact it was a contract firm leading her to ruin. And she kept getting different contacts every time.
(Why anyone would think that the CEO of the largest bank in the nation would personally handle their $167,000 mortgage is beyond me, but let’s table that.)
The allegations of misconduct are presented like they are an ongoing, current problem. Even if the allegations are 100% accurate, they are not current problems. They have been, as Smith said, addressed by regulation and legislation.
For example, part of the NMS is the requirement for a “single point of contact” (SPOC) for troubled mortgage holders. Under the SPOC directive, servicers must assign a single relationship manager for each borrower in the HAMP or other foreclosure-prevention options, and that SPOC can’t be a contractor.
In short, what they say happened to Santamaria can’t legally happen anymore.
For its part, Bank of America issued a broad denial of the allegations in the story, while not addressing the specifics.
Jumana Bauwens, a spokesperson for Bank of America, said, "The bank has fully investigated similar allegations and proven them to be false."
Further, she provided the following to put into perspective Bank of America’s efforts in terms of modifications.
"Our focus is on serving the need of our customers and we have helped more than 1.9 million customers avoid foreclosure, including the more than a quarter of a million modifications made through the government’s Home Affordable Modification Program," she said. "There is no incentive for us to delay or deny relief to eligible customers. Rather, Bank of America has converted more trial and permanent HAMP modifications than any other loan servicer—and has dedicated enormous resources to HAMP as part of its commitment to promoting modifications as an alternative to foreclosure that benefits homeowners, investors, and servicers."
It’s not even clear from the Bloomberg story if Urban Lending Solutions, the contractor from whence most of the unnamed sources come and to which most of the worst behavior is attributed, is still a contractor for Bank of America.
They are, in fact.
And they are ticked.
We called Glenn Stevens, executive vice president and general counsel for ULS. He had this to tell us:
"The article speaks about events that allegedly took place 3-4 years ago. Any allegations in the article that are leveled against ULS are baseless, offensive and constitute nothing more than the unsubstantiated accusations of a few disgruntled ex-employees. ULS specifically told this to the reporter who wrote the article and ULS’ comments are in the article," Stevens said in an follow up email. "ULS denies that it engaged in any wrongdoing and reserves the right to take appropriate legal action against those who are defaming its good name."