Bank Of America Defrauded HAMP

Last week Reuters reported, per a recently unsealed whistleblower lawsuit, that Bank of America had prevented homeowners from receiving loan modifications under HAMP in order to avoid millions of dollars in loses while benefiting from financial incentives for participating in the program.

Shocking. That BofA would be guilty of such actions is probably the least surprising part of the story.

However, it’s remarkable that after all the damage caused to our economy by our nations lenders, a better system wasn’t in place to monitor how they were handling these incentive-based modifications.

The complaint, which was part of the False Claims Act settlement announced by BofA and the U.S. Attorney’s Office for the Eastern District of New York on February 9th, claims BofA and it’s subsidiary BAC Homes Loans Servicing LP, implemented “business practices designed to intentionally prevent scores of eligible homeowners from becoming eligible or staying eligible for permanent HAMP modification.”

According to Reuters, the bank and its agents routinely pretended to have lost homeowners’ documents, failed to credit payments during trial modifications and intentionally misled homeowners about their eligibility for the program.

The complaint also noted that “… BofA had it both ways. BofA has continued to maximize the value of its mortgage portfolio with anit-HAMP modification practices and managed to make money by committing fraud on homeowners.”

This should enrage people. I’ve seen the pain of the load modification process first hand, and it is rough. Unlike a short sale, where people have typically already come to terms that they’ll be leaving their home and moving on, people applying for loan modifications are desperately trying to hang on to their homes.

Constantly sending the lender more and more information, while re-explaining your situation over and over again takes people past the point of frustration and well into the realm of insanity. Believing that making it through the loan mod gauntlet would save their homes, was likely the only motivation to keep them going.

Now it appears that for many of those people, it was all for nothing – they never had legitimate chance from the start and were simply delaying the inevitable. Even worse, BofA was able to profit off this experience.

I have no doubt that tens of thousands of people – with loans owned or serviced by various lenders, not just BofA – shared in the experiences the complaint alleges. Hopefully, people will continue to come forward and report these practices. We simply can not trust lenders to do the right thing and it’s time proper measures are put in place to ensure that people who need assistance get it – especially, if a lender is to receive or has received ANY measure of financial assistance from U.S. tax payers…