MORTGAGES NEW YORK — Bank of America Corp., the second-biggest U.S. lender, rewarded staff with cash bonuses and gift cards for meeting quotas tied to sending distressed homeowners into foreclosure, former employees said in court documents.
Mortgage workers falsified records and were told to delay U.S. loan-assistance applications by requesting paperwork that the Charlotte, N.C.-based bank had already received, according to statements from ex-employees filed last week in federal court in Boston. The lender improperly disqualified applicants to the Home Affordable Modification Program, or HAMP, according to a May 23 statement from Simone Gordon, a loss-mitigation specialist who left the company in 2012.
“We were regularly drilled that it was our job to maximize fees for the bank by fostering and extending delay of the HAMP modification process by any means we could,” Gordon said. Managers instructed staff to “delay modifications by telling homeowners who called in that their documents were ‘under review,’ when in fact, there had been no review,” she said. The bank has denied the plantiffs’ allegations.
Bank of America, which has spent more than $45 billion to settle claims tied to its 2008 takeover of Countrywide Financial Corp., is being sued by homeowners who didn’t receive permanent loan modifications after making payments under trial programs, according to court papers. Statements from seven former loan employees were included in a filing last week as part of plaintiffs’ attempt to gain class-action status.
Bank of America has helped the most homeowners under HAMP and is committed to assisting customers at risk of foreclosure, Rick Simon, a company spokesman, said Friday in an email.
“At best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees,” Simon said. “While we will address the declarations in more depth when we file our opposition to the plaintiffs’ motion next month, suffice it to say that each of the declarations is rife with factual inaccuracies.”
The lender unsuccessfully tried to dismiss the complaint in 2011. U.S. District Judge Rya Zobel ruled that the case could proceed while dismissing some claims.
Loan collectors who put at least 10 customers into foreclosure, including those who were in trial modifications, were given a $500 bonus, said Gordon, who worked at Bank of America for more than four years. Other rewards included gift cards for retailers including Target and Bed, Bath and Beyond, she said.
Another former employee, Theresa Terrelonge, said loan officers were given restaurant gift cards and $25 cash awards for denying loan applications.
The law firm is in contact with more than 1,000 Bank of America customers who said they completed requirements for a trial and were denied permanent modifications, attorney Steve Berman of Hagens Berman Sobol Shapiro said in a court filing.
Lawyers supported their claims with declarations from the seven employees, many of whom said they had access to the bank’s software, which allowed them to understand the process.
“I personally reviewed hundreds of files in which the computer systems showed that the homeowner had fulfilled a trial-period plan” before being denied, said William Wilson, a loan manager who left the firm in August. “On many occasions, homeowners who did not receive the permanent modification that they were entitled to ultimately lost their homes.”
The bank held a twice-monthly “blitz” in which thousands of cases were improperly denied, Wilson said. Employees would certify to the Treasury Department false reasons for rejections, he said.