For months after the Home Affordable Modification Program (HAMP) — the Obama administration’s signature foreclosure prevention program — was launched, Bank of America lagged behind the other servicers in the percentage of eligible borrowers that it was successfully navigating into a permanent mortgage modification. Part of the problem was that BofA was utterly incapable, by its own admission, of keeping track of paperwork and working constructively with borrowers.
When the ongoing foreclosure fraud scandal hit, Bank of America was the first institution to implement a foreclosure freeze, and the only bank to extend its freeze to all fifty states. However, BofA announced yesterday that it has reviewed its foreclosure process and “had not found a single example where a foreclosure proceeding was brought in error.” Therefore, the bank is moving ahead with more than 100,000 foreclosures on Monday in the 23 states that require judicial review to complete a foreclosure.
As the New York Times noted, “consumer advocates and lawyers for homeowners expressed skepticism that Bank of America could complete a review of the paperwork so quickly.” Indeed, let’s put this in perspective. Bank of America has been participating in HAMP for roughly 18 months, during which time it offered 410,000 trial modifications, started 316,000, and turned about 80,000 into permanent modifications. That’s about 760 trial modifications per day and 4,400 permanent modifications per month.
In the last ten days, though, Bank of America managed to plow through 102,000 cases to get them ready to go back to court. That’s more than 10,000 reviews per day. Peter Ticktin, a Florida based lawyer, questioned how BofA could suddenly find the wherewithal to validate so much paperwork so quickly. “This wasn’t just a simple little mistake of forgetting to dot the ‘i,’” he said. “There was a whole system put in place to make false affidavits. How are they going to erect a new system to do 102,000 affidavits unless they are going to use the same old law firms to make a second generation of bad affidavits?”
Now, Bank of America’s modification numbers were likely skewed downward because, as Andrew Jakabovics and I first reported, it was attempting to siphon borrowers off into its own private modification program, in violation of its contract with Treasury. But still, the bank jerked borrowers around for months and couldn’t get them through HAMP, but now that its faced with a mess that could blow a hole in its bottom line, it kicks its operation into high gear. David Dayen added these points:
Two things on this. One, it neglects the clear risk to the rule of law that banks like BofA submitted phony documents to a court. Whether they take them back now or not has no bearing on this attempt to commit fraud. Two, it localizes the issue to the signing of the affidavits and not the impropriety of the documents themselves – the forgeries, the backdating, the failure to inform borrowers of foreclosure actions, all of the horror stories we’ve heard over the past month.
Somewhere along the line, there were fraudulent documents and a breakdown of due process. But the banks are still acting like this is simply a paperwork problem.
The Big Picture’s Barry Ritholz: “Bank of America is claiming that there were no mistakes made in foreclosures, despite widespread perjury, fraud, and omitted file and document reviews. I sincerely doubt that, given the Legal Impossibilities & Foreclosure Errors we have already discovered.”