Archive for April, 2012
Excellent MSNBC Investigation Exposes Questionable Foreclosure Practices at Wells Fargo…But You Already Knew That
MSNBC.com recently posted an excellent investigative piece looking at the inner workings of the foreclosure industry–the sausage factory, as I like to call it. As you might expect, the article was full of stories of hastily generated documents and a culture of putting speed of processing foreclosures over accuracy.
If you follow this blog, or if you’ve even been awake for any part of the last couple years, you already know that the mortgage industry has less than clean hands, particularly when it comes to foreclosures. Nevertheless, it is refreshing to see a major media outlet look behind the curtain of the big banks’ foreclosure departments.
Some of the more interesting points of the article:
- A Wells Fargo employee who contacted msnbc.com via email told of a wide range of concerns about the foreclosure documents she processes. Some families apparently were denied loan modifications after only cursory interviews, she said. Other borrowers applying for help sent comprehensive personal financial documents to a fax machine that she discovered had been unattended for weeks. Others landed in foreclosure after owing interest payments of as little as $1.18 a day, according to documents she said she reviewed.
On the issue of quotas (whether loan processors have to generate a certain number of files per day)
- One manager, in a daily “3 p.m. pulse check,” e-mail reminded her team recently that “we need 11 new signed notarized files per reviewer per day,” reminding the staff that “I asked that you take a few files at a time to be signed [and] notarized; it does not appear we are following this process.” On other occasions, the reminders can be more pointed. When a backlog of 59 files needed to be completed by 11 a.m. the next day, another manager e-mailed his team: “No one should be doing anything other than [these] files. No socializing, no going for breakfast, no doing [other] files … until we are done with [these files]. It is that important. Help me out with this. If you finish all [the] files in your pipeline, you are expected to ask me for more.” Last December, with just a few working days left in 2011 and the pressure on to churn out the paperwork required to seize a batch of homes in Kentucky and Connecticut, one of the managers sent an e-mail urging his team….”You must sign at least 10 NEW files every day,” the e-mail said. “Less than 10 is unacceptable.”
- Federal investigators reported last month that Wells Fargo document processors had “signed the great majority of the judgment affidavits without personal knowledge or otherwise verifying the data and information.” That investigation took place in the fall of 2010. But the Wells Fargo employees who spoke to msnbc.com on condition they would remain anonymous said those practices persist in the Charlotte office. Their knowledge of a foreclosure filing is limited by a process that relies on data provided by a third party vendor and based on documents they don’t always have time to review, according to the employees. As they prepare each affidavit, which carries the same legal weight as sworn testimony by a witness in a courtroom, document processors are tasked with certifying two basic claims that Wells Fargo makes before it sends a homeowner out onto the street. The first includes the bank’s detailed accounting of what it claims the borrower owes in back payments. The second claim requires that processors sift through the paper trail that shows Wells Fargo has the legal right to seize a home.
Overall, the MSNBC.com investigative piece doesn’t reveal anything particularly new, but it is a good chronicle of previous bad practices and an unsettling reminder that these practices have not stopped. Most importantly, in my opinion, it is a cautionary tale to homeowners who are fighting the system. If you choose to take on the banks yourself, READ, READ, READ as much about mortgage lending as possible. And I don’t just mean blogs. Really learn how the process works, so that you can tell whether it worked properly on your loan. Millions of loans have been made over the years, and they’re not all bad. It’s not enough to simply cite an MSNBC article or 60 Minutes piece to a judge. You must be able to identify what went wrong on YOUR loan (and remember, banks aren’t required to give you a modification).
Sound daunting? It can be. If you think you’re in over your head, talk to a foreclosure defense attorney in your area or call your state’s attorney general. Afraid you can’t afford a lawyer? Many attorneys (including myself and my colleague Charles Parson in Utah) offer free consultations and can point you in the right direction. Additionally, most metropolitan areas have legal service clinics that may be able to provide a pro bono attorney for little or no cost. But as I’ve preached before, you must take action on your own. If you do nothing or wait on the bank, the result is probably not going to be good.
Bank of America was recently the butt of a practical joke, a piece of satire, or political protest (depending on your point of view). BoA’s website was spoofed by a group who has yet to be identified. The spoof website, www.yourBofA.com, opens with a “fake” letter from Bank of America CEO Brian Moynihan.
Feel free to make up your own mind about the commentary included in www.yourBoA.com, but at a minimum, it’s worth a chuckle from those who have fought with this banking giant.
Chalk this one up in the category of “How Stupid Can They Get.” Bank of America has sued itself–multiple times–in foreclosure cases in Florida. You read that right, Bank of America has sued itself to enforce a foreclosure.
As a Texas foreclosure defense lawyer, this even leaves me scratching my head. The situation arose when Bank of America acted as the servicer for the for original lender (first mortgage holder) and when BoA also extended a home equity loan (a second mortgage) on the same property. As the servicer, they sued to foreclose and named all junior lienholders, which they also happened to be as the lender of a home equity loan.
Technically, this may have been the correct procedure–in theory. In reality, it’s absolutely ridiculous, both on the part of Bank of America and their lawyers. As an attorney, I could not imagine a scenario where I would recommend to my client that they sue themselves. In fact, I would have a conflict of interest as soon as the suit was filed, requiring me to withdraw as their lawyer. This is a shining example of Bank of America mindlessly generating forms and documents without regard to their consequence.
You would think that something this absurd is a rarity, but it’s not. As early as 2009, Wells Fargo was reported for having sued itself in similar cases.
So, when you’re working with your “lender” on a modification or reinstatement of your loan, and they act as if they’re genuinely interested in trying to help you, just remember that these are the exact same folks that will sue themselves.
And Wells Fargo just got slaughtered. A recent ruling out of the Bankruptcy Court of the Eastern District of Louisiana sent one of the most decisive statements that certain judges understand what is going on with the foreclosure mess embroiling this country.
Last week, bankruptcy court judge Elizabeth W. Magner, hit Wells Fargo for costs, sanctions and fees of nearly $300,000.00. She then hit Wells Fargo with punitive damages of $3,100,000.00. Three. Point. One. Million. And this was on one loan.
Essentially what happened is the debtor filed for chapter 13 protection under the bankruptcy code. This is the section where you make payments to your creditors over a certain number of years and keep your property. The debtor filed that plan and made his payments to the Trustee as required. What Wells Fargo did, however, was divert funds they received from the Trustee to fees and charges that were not approved by the Trustee or the Court under the plan. Probably would not have been a huge deal if they had not been hit with sanctions just 4 months earlier in an almost identical case for doing the exact same thing.
This judge was having none of it, calling Wells Fargo’s conduct “reprehensible” and “clandestine”.
Obviously every case is different, but there is certainly more than one way to skin a cat. The irony is Wells Fargo has held themselves out as being above the fray in the whole meltdown. If you are facing foreclosure, or are in bankruptcy, make sure you have counsel who is well versed in foreclosure defense to protect your interests. The courts are starting to get it even if the media continues to refuse to report on it.
Hat Tip, NakedCapitalism.