Bank of America: Where Borrowers Couldn't Get a Break

To deal with a backlog of complaints from homeowners seeking help through President Obama’s signature mortgage assistance program, Bank of America hired outside contractors, including Urban Lending Solutions in Broomfield, Colo. Rather than helping homeowners, the bank kept putting obstacles in their way, say nine former Urban Lending employees. Borrowers were asked to resubmit paperwork, their debt-to-income ratios were recorded incorrectly, and their complaints were wrongly marked resolved, the former employees say. Urban Lending sent letters containing inaccurate statements to lawmakers and U.S. agency officials who sought assistance on behalf of borrowers, the former employees say, using stationery marked “Office of the CEO and President” of Bank of America. Because of the delays, some borrowers were sent into foreclosure or given loan modifications padded with late fees, according to the people, all but two of whom asked to remain anonymous because they signed confidentiality agreements.

The accounts of the former employees help explain why the Home Affordable Modification Program, introduced in 2009, has fallen far short of its goal of averting 3 million foreclosures. HAMP was the centerpiece of Obama’s attempt to keep people in their homes by lowering distressed borrowers’ mortgage payments. Under the program, homeowners are given trial modifications—usually lower interest rates or loan extensions. If they are able to make the reduced payments for three to four months, the changes become permanent.