Editor’s note: This article was first published in June 2013, during the US foreclosure crisis, and the accounts it reports about loan modifications under the HAMP programme were current then. HAMP closed to new applications at the end of 2016.
Six former Bank of America employees have alleged that the bank lied to its customers about the status of their mortgage payments and paperwork, according to Business Insider.
According to these former workers, the bank paid commissions for every foreclosure. In other words, the bank paid its employees for each family it evicted. They could be rewarded with cash bonuses or with gift cards for retailers such as Target Corp and Bed Bath & Beyond Inc. In the same way, the bank could penalise and even fire employees who had fewer foreclosures or who refused to go along with certain potentially unethical banking practices.
The Home Affordable Modification Program (HAMP), a scheme designed by the US government so that borrowers could negotiate and modify their mortgage loans, was meant to stop the epidemic of foreclosures. But according to these six former employees, the bank gave the government false information and deliberately turned down thousands of loan modification applications for the sole purpose of keeping the homes.
The former employees allege that homeowners were lied to: they were told that their documents and payments had not been received, when in fact they had arrived.
They allege that this was done to reject HAMP applications and keep the home, or to delay the HAMP process so the bank could offer the homeowner a more expensive alternative, at a cost of up to 5%, when the loan could have been modified at 2% under HAMP. That is according to a sworn statement by W. Wilson, who worked at one of the bank’s offices in North Carolina and described these practices as immoral.
Featured image: ishmael daro from New York, CC BY 2.0, via Wikimedia Commons.
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