“We were told to lie”
The unending saga of the megabanks’ dispossession of working-class homeowners
The checks have been mailed, the billions dispensed that the banks were supposed to give homeowners to redress the wrongs committed during the housing crisis.
It turns out even that was a sham.
If you or a friend — or a family member, a neighbor, a co-worker, or all of the above — lost your home to foreclosure after the bubble burst, you have every right to get mad. Again.
A year ago, the five megabanks made a $25 billion agreement with the federal government and state attorneys general, most of which was supposed to go to homeowners the banks had foreclosed on.
Last January, the megabanks agreed to another, $8.5 billion settlement with the Federal Reserve, most of which was also to go to the banks’ foreclosure victims.
Here’s what they actually did.
During the crisis, when people tried to get their loans modified, the banks had put them through a wringer — then foreclosed on them anyway.
They shifted them from service rep to service rep, lost their paper work repeatedly and demanded it all over again, denied them because the applications were “incomplete,” and deluged them with foreclosure notices.
The banks weren’t overwhelmed (as they said) or incompetent (as we all believed). It was as planned; they were doing it on purpose.
That came out in a suit against the Bank of America in Massachusetts. Half a dozen ex-BOA employees testified that their bosses actually ordered them to put people off — “We were told to lie” — and deny loan applications “by any means we could.”
Supervisors roamed the floors wearing head sets and listening in on service reps’ calls, they said. They handed out $500 bonuses for every 10 foreclosures they created, $25 for denying loan applications. They kicked back loans that had been approved and fired people who didn’t meet their foreclosure quota.
This is what the $25-billion settlement was supposed to redress. And the banks say that now they’ve done so.
It hasn’t cost them any money. What they’ve done is to forgive uncollectible debt. Most of what they’re claiming credit for was forcing people to make short sales (sell the house for less than the mortgage) and canceling the second mortgage to make that possible.
Precious little debt relief has gone to reducing mortgages and keeping people in their homes.
The banks would done all this anyway, settlement or no settlement. Now they’re boasting they’ve provided twice as much debt relief as they were required to. It must be good business.
The end result? People have been forced out of their homes, a great many of which have been sold to the hedge funds that are buying up thousands of houses and renting them back to the families who got put on the street.
It gets worse. When people’s anger against the banks was strongest, the Federal Reserve forced the banks to agree to review all four million foreclosed mortgages and rectify any errors. Victims were supposed to get $15,000 and their house back, or another $125,000 if it had been sold.
Not to worry. The banks hired their closest consultants to do the reviews, paid them $250 an hour — taxpayer money — to see no evil, hear no evil, speak no evil. And after reviewing only 111,000 files, they abruptly cancelled the whole thing, taking the $8.5 billion settlement to head off being exposed by the government’s General Accounting Office.
And it’s not over. As part of the $25 billion settlement, the banks agreed to change their ways — no more musical chairs with service reps, no more “lost” documents, no more unexplained denials . . .
But they haven’t stopped. The attorney general of Massachusetts charges they are at it all over again. The attorney general of New York is suing Wells Fargo for “Kafkaesque delays and obstructions” in negotiating loan modifications.
So get mad. Again. And this time, let’s do something about it.