Bloomberg investigation has uncovered a secret office created by Bank of America called "the Office of the CEO and President" set up ostensibly to handle complaints homeowners trying to refinance in the government’s Home Affordable Modification Program. But when frustrated homeowners, and members of Congress and regulators, finally reached what they thought was the pinnacle of BoA where something might just be done to help them, they were really being shuffled off to a contractor site, Urban Lending, whose primary job appears to have been delaying the process until the homeowners could be forced into foreclosure.

Urban Lending was one of the vendors hired to clear a huge backlog of complaints, at least 15,000 of them, that Bank of America had amassed. It was specifically "brought in to handle grievances from lawmakers and regulators on behalf of borrowers, also operated a mail-processing center for HAMP documents."



Instead of helping homeowners as promised under agreements with the U.S. Treasury Department, Bank of America stalled them with repeated requests for paperwork and incorrect income calculations, according to nine former Urban Lending employees. Some borrowers were sent into foreclosure or pricier loan modifications padded with fees resulting from the delays, according to the people, all but two of whom asked to remain anonymous because they signed confidentiality agreements. Bank of America stands out in a program that lawmakers and former Federal Deposit Insurance Corp. Chairman Sheila Bair have called a failure, leaving many homeowners worse off. The second-largest U.S. lender canceled more trial modifications than any mortgage firm and sent the highest percentage of rejected customers into foreclosure, Treasury data show. To help run its modification program, Bank of America relied on managers who had worked at Countrywide Financial Corp., the subprime lender it took over in 2008. Those executives created and enforced quotas for resolving complaints, according to the former employees. Among them was Rebecca Mairone, found liable by a federal jury in October for defrauding government-backed housing companies Fannie Mae and Freddie Mac while working at Countrywide. Urban Lending staff, struggling to meet those quotas, resorted to falsifying records and improperly purging complaints, the people said. They sent letters containing inaccurate statements on Office of the CEO and President stationery to lawmakers and U.S. agency officials who sought assistance on behalf of borrowers, the former employees said.[...] “Everyone knew that we weren’t helping people,” said Erik Schnackenberg, a customer-service manager who left Urban Lending in 2011 and now runs a yoga studio in Longmont, Colorado. “They were giving us all the pressure and none of the power to change anything. It was this absurd, self-contained ecosystem of worthlessness.”

It's really worth reading the entire Bloomberg story just to get the breadth and the scope of BoA's wrong-doing. One nice illustration is the warehouse with unopened mail piled up to the ceiling, where "time-sensitive documents such as pay stubs grew stale." That caused homeowners to have to repeatedly resubmit documentation. It also caused them to have to pay thousands more in fees and in fines because of the delays. One former employee of Urban Lending called the warehouse a "black hole" in his unsuccessful suit against BoA for intentionally denying HAMP modifications to lenders who were qualified.

Bank of America can almost single-handedly claim the blame for making the HAMP program such a failure. Thirty-three percent of borrowers attempting to use HAMP to modify their mortgages at BoA ended up in foreclosure.