Former Bank of America employees have alleged that the lender routinely stalled applications for the Home Affordable Modification Program and intentionally misinformed borrowers about the status of loan application documents already on file, HousingWire reported June 17.
The allegations were reported in an ongoing lawsuit against Bank of America in federal court in Washington state.
Former bank employees also claimed that employees were asked to choose appropriate reasons for denying loan modification applications to justify HAMP denials to the U.S. Department of the Treasury, and that the bank further asked employees to delay HAMP applications so as to steer troubled borrowers toward alternate solutions that would be more profitable for Bank of America, HousingWire reported.
According to the suit, one former bank customer service representative was “instructed to inform every homeowner who called in that their file was under review — even when the computer system showed that the file had not been accessed in months or when the homeowner had already been rejected for a loan modification,” HousingWire reported. The former employee further testified that the bank ignored completed loan modifications and showed loans as delinquent in the computer system although a HAMP modification had been completed.
A former Bank of America case management team manager testified that it was a common tactic to advise borrowers that their loan applications still were under review in an effort to delay the process long enough for the bank to offer alternative solutions to the borrower — solutions that would be more profitable to the bank but less advantageous to the borrower.
“The unfortunate truth is that many and possibly most of these people were entitled to a HAMP loan modification, but had little choice but to accept a more expensive and less favorable in-house modification,” the former employee alleged, HousingWire reported.
The former case management team manager also claimed that Bank of America would hold a “blitz” twice a month to encourage teams to clear out backlogs of HAMP applications by denying those with financial documents older than 60 days. “During a blitz, a single team would decline between 600 and 1,500 modification files at a time for no reason other than that the documents were more than 60 days old,” ” the former employee testified, HousingWire reported.
Bank of America has denied the allegations, noting in a recent statement, “Bank of America has successfully completed more modifications for our customers in need of assistance than any other servicer under the Home Affordable Modification Program,” HousingWire reported.