Bank of America, to its credit, was the only bank to freeze foreclosures in all 50 states as a result of revelations regarding the “robo-signers”: bank employees who were approving thousands of foreclosure without verifying basic information. However, BofA restarted its foreclosure machine just ten days later, saying that it had examined more than 100,000 foreclosure cases and found no problems.
Shortly thereafter, BofA backtracked and said that it had actually found some problems, but tried to downplay them as simple paperwork errors — like misspelling names — rather than a systemic effort to rush foreclosures through the pipeline with almost complete disregard for the legal process. But a former BofA robo-signer told his story to CNN Money and painted a very different picture:
[Former BofA employee Tam Doan] didn’t have time to actually read the paperwork he was signing, he said, and in some cases, he didn’t even know what documents he was putting his pen to. “I had no idea what I was signing,” said Doan. “Either you were in or you were out.” […]
The paperwork he robo-signed most often were the notices to delinquent borrowers that the servicer was proceeding to foreclosure. By signing that document, he was affirming that the bank had reviewed the loan and it didn’t qualify for a modification. But, he said, the reality was he had no idea whether Bank of America had really tried to save the borrower’s home. “We had no knowledge of whether the foreclosure could proceed or couldn’t, but regardless, we signed the documents to get these foreclosures out of the way,” he said, noting that he assumed another department had checked that the review was done.
Doan’s description of BofA neglecting to verify whether or not borrowers qualified for a loan modifications fits in with our previous reporting. We found that the bank was siphoning borrowers into its own private loan modification program without checking whether they qualified for federal modification programs, in clear violation of the bank’s contract with the Treasury Department.
But more importantly, Doan’s story strikes right at the heart of the image the banks want to convey regarding foreclosure-gate. They want to make it a story about careless mistakes and sloppy paperwork, when it’s really one about a system explicitly designed to cut corners, even if that meant violating due process and the legal requirements for foreclosing on a home.
Even if there were no homeowners who were improperly foreclosed upon (and we know there were, including some who literally didn’t have a mortgage), the banks’ blatant disregard for process should be enough to warrant slamming the brakes on their foreclosure factories, especially considering that the extent of the problem is still unclear. One investor told CNBC today that he estimates that the mortgage mess could cost the banks $97 billion in losses.