Cory Booker Is Nauseous. For All The Wrong Reasons.
Bank of America played a role in the financial crisis, and has compounded its sins in the aftermath. ProPublica has found
Bank of America employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure, according to sworn statements by former bank employees.
The employee statements were filed late last week in federal court in Boston as part of a multi-state class action suit brought on behalf of homeowners who sought to avoid foreclosure through the government’s Home Affordable Modification Program (HAMP) but say they had their cases botched by Bank of America.
In a statement, a Bank of America spokesman said that each of the former employees’ statements is “rife with factual inaccuracies” and that the bank will respond more fully in court next month. He said that Bank of America had modified more loans than any other bank and continues to “demonstrate our commitment to assisting customers who are at risk of foreclosure.”
Six of the former employees worked for the bank, while one worked for a contractor. They range from former managers to front-line employees, and all dealt with homeowners seeking to avoid foreclosure through the government’s program.
When the Obama administration launched HAMP in 2009, Bank of America was by far the largest mortgage servicer in the program. It had twice as many loans eligible as the next largest bank. The former employees say that, in response to this crush of struggling homeowners, the bank often misled them and denied applications for bogus reasons.
Sometimes, homeowners were simply denied en masse in a procedure called a “blitz,” said William Wilson, Jr., who worked as an underwriter and manager from 2010 until 2012. As part of the modification applications, homeowners were required to send in documents with their financial information. About twice a month, Wilson said, the bank ordered that all files with documentation 60 or more days old simply be denied. “During a blitz, a single team would decline between 600 and 1,500 modification files at a time,” he said in the sworn declaration. To justify the denials, employees produced fictitious reasons, for instance saying the homeowner had not sent in the required documents, when in actuality, they had.
Such mass denials may have occurred at other mortgage servicers. Chris Wyatt, a former employee of Goldman Sachs subsidiary Litton Loan Servicing, told ProPublica in 2012 that the company periodically conducted “denial sweeps” to reduce the backlog of homeowners. A spokesman for Goldman Sachs said at the time that the company disagreed with Wyatt's account but offered no specifics.
Five of the former Bank of America employees stated that they were encouraged to mislead customers. “We were told to lie to customers and claim that Bank of America had not received documents it had requested,” said Simone Gordon, who worked at the bank from 2007 until early 2012 as a senior collector. “We were told that admitting that the Bank received documents ‘would open a can of worms,’” she said, since the bank was required to underwrite applications within 30 days of receiving documents and didn’t have adequate staff. Wilson said each underwriter commonly had 400 outstanding applications awaiting review.
Anxious homeowners calling in for an update on their application were frequently told that their applications were “under review” when, in fact, nothing had been done in months, or the application had already been denied, four former employees said.
Employees were rewarded for denying applications and referring customers to foreclosure, according to the statements. Gordon said collectors “who placed ten or more accounts into foreclosure in a given month received a $500 bonus.” Other rewards included gift cards to retail stores or restaurants, said Gordon and Theresa Terrelonge, who worked as a collector from 2009 until 2010.
But why dump on Bank of America (actually, plenty of reasons) when there is so much blame to go around in the industry? The New York Times last week reported
JP Morgan disclosed on Wednesday that it faced a criminal and civil investigation into whether it sold shoddy mortgage securities to investors in the run-up to the financial crisis, the latest legal threat to the nation’s biggest bank.
JPMorgan acknowledged for the first time the existence of the investigation — one of several mortgage-related problems looming for the bank — in a quarterly regulatory filing. It said that the civil division of the United States attorney’s office for the Eastern District of California, which covers a stretch of land that includes Sacramento and Yosemite, has “preliminarily concluded” that JPMorgan flouted federal laws with its sale of subprime mortgage securities from 2005 to 2007. The parallel criminal inquiry, according to one person briefed on the matter, is in a more preliminary stage.
Adding to scrutiny of the bank, federal prosecutors in Philadelphia are examining whether JPMorgan duped investors into buying troubled mortgage securities that later imploded, according to people briefed on the matter, who spoke on the condition of anonymity. The prosecutors are investigating whether JPMorgan churned out the mortgage-backed securities without ensuring that the investments met underwriting standards, the people said.
In 2008, Cory Booker was a surrogate for Barack Obama running against Mitt Romney, yet stated
I have to just say, from a very personal level, I'm not about to sit here and indict private equity. To me, it's just we're getting to a ridiculous point in America, especially that I know I live in a state where pension funds, unions and other people are investing in companies like Bain Capital. If you look at the totality of Bain Capital's record, they've done a lot to support businesses, to grow businesses. And this to me, I'm very uncomfortable with. he last point I'll make is this kind of stuff is nauseating to me on both sides. It's nauseating to the American public. Enough is enough. Stop attacking private equity. Stop attacking Jeremiah Wright.
Charles Pierce remembers, and in the run-up to New Jersey's primary elections for United States Senator, remarks
I've forgotten, how many houses did Jeremiah Wright steal out from under their owners? How many toxic mortgages did he foist off on unsuspecting customers while getting rich betting against the same investments? How many pensions did he loot? How close did Jeremiah Wright come to wrecking the entire world economy? This is both-sides-do-it taken to a level of political idiocy. And the reasons you live in a state where unions are investing their pensions in private equity funds — and how'd that work out, by the way? Jeremiah Wright must have stolen all the money. — is because they don't have any choice, because, down through the years, the financial services industry, and its many sublets in various legislatures and under various presidents of the United States, successfully lobbied to break unions and, thereby, end the system of guaranteed pensions provided by your actual employer.
Yet, when the predatory nature of America's business elites threatened to become an actual political issue, Cory Booker leaped to salve the wounded fees-fees of the crooks.
Booker was right- there is something nauseating here, only it goes way beyond Chicago's Jeremiah Wright to New Jersey, whose Democrats are preparing to nominate tomorrow that very Cory Booker to be their candidate to fill the unexpired term of Frank Lautenberg for the U.S. Senate.
And it's not as if there is no alternative. Three Democrats are running against Booker and two of them, U.S. House members Frank Pallone and Rush Holt are far, far superior alternatives. Senate Majority Leader Harry Reid, who exercised the senatorial privilege of contempt toward members of the House, anointed Booker in July the next Senator from New Jersey. Nancy Pelosi, the party's leader in the House of Representatives, home to both Pallone and Holt, has said this:
Nothing: nothing from Nancy Pelosi while Harry Reid gives a de facto endorsement to Newark Mayor Booker. Apparently, the rot extends beyond Cory Booker to Washington's Democratic establishment, which- for whatever reason(s)- believes experienced, progressive legislators need not apply.