Quick Hit Ashlee Rezin Tuesday July 9th, 2013, 5:05pm

Bank Of America Customers Seek Loan Modifications Amid Whistleblower Scandal (VIDEO)

In light of recent whistleblower allegations from former employees detailing Bank of America’s purported loan modification and foreclosure abuses, protesters descended upon a downtown Chicago branch Tuesday.

Organized by Action Now, two members of the grassroots community organization sought loan modifications from bank officials while a gathering of roughly two-dozen protesters marched and chanted outside.

“We’re trying to put pressure on the bank to do what they’re supposed to do — they’re supposed to help homeowners,” said Tim Rivard, foreclosure outreach coordinator for Action Now. “If we get the bank to start working with us, or working with people who are in trouble with their mortgages, this could set a good precedent.”<--break->

The two Action Now members and Bank of America customers, Christine Appau and Sandra Hinson, were granted a meeting with bank officials and Vice President Patricia Holden.

Bank of America, the second-largest mortgage lender in the U.S., assigned both Hinson and Appau a personal case manager. Upon leaving today’s meeting, both Action Now members have follow-up appointments scheduled in the next two weeks.

“I was drowning before, but now I’m looking forward to some help and I can breathe a little easier,” said Appau. “God only knows what will happen to me if I don’t get this loan application, I’d be out in the street.”

After more than 12 months of submitting and resubmitting applications and documents to Bank of America, Appau was denied a loan modification for her South Side home earlier this year and is now facing foreclosure.

She said the cost of burying her father, a serious spinal surgery that left her bedridden and unable to work for several months, and damage to her home following severe floods that devastated the state earlier this year, sent her debt spiraling out of control.

“There’s no one that can come to my rescue, I have no one to go and live with,” said Appau. “Right now, I’m hopeful Bank of America will listen to me and I will get this loan modification. I am depending on them to come through for me.”

Meanwhile, Hinson is seeking a loan modification on behalf of her 90 year-old mother, according to Action Now. While Social Security pays Hinson’s mom $1,000 a month, a spokesperson for the organization said, her loan payment for her West Side home is $925, leaving the retiree with only $75 for basic monthly expenses.

“There’s been a divestment of trust,” said Dan Kleinman, policy director for Action Now, who attended the meeting with Appau and Hinson. “We, consumers of Bank of America and a public that trusts the bank with taxpayer dollars, place trust on them with our homes and livelihoods. We are now expecting repayment.”

Kleinman said Action Now will assist both Appau and Hinson with their loan modification applications.  

“There is a demand for fairness and accountability from those servicing our mortgages,” he said. “And it is very fair to exercise that demand and expect an answer.”

Charles Brown, board member of Action Now and resident of Chicago’s South Side neighborhood of Englewood, said Bank of America is contributing to the surplus of vacant buildings that have “decimated” his community.

The city of Chicago has received more than 39,500 vacant building service requests since 2010, according to daily updated data compiled by the Department of Buildings.

According to a 2011 study by the Woodstock Institutenearly 70 percent of the city's vacant properties from 2006 to 2010 were associated with a foreclosure filing.

“The very people they are supposed to help, they are using them for financial gain,” said Brown. “They are destroying the lives and neighborhoods of millions of middle class people.”

Brown spoke at a press conference during Tuesday’s protest:

Six former Bank of America employees and one contractor filed sworn statements in June, alleging the bank lied to applicants of loan modifications, rejected applications on fraudulent grounds and incentivized bank employees to drive homeowners into foreclosure.

Last month, the statements were added to a civil lawsuit comprised of 29 separate suits from across the country. The lawsuit was first filed in federal court in Massachusetts in 2011.

The lawsuit alleges the bank repeatedly violated the federal Home Affordable Modification Program (HAMP).

The program, designed to simplify the loan modification process, allows borrowers to make reduced payments on their home mortgage debt during a trial period while the loan modification process is hashed out. Mortgage servicers receive incentive payments for participating in HAMP.

Upon completion of the trial period, the lawsuit alleges many homeowners were fraudulently denied a permanent loan modification, and thus were forced to pay the difference accrued during the trial period.

“I personally reviewed hundreds of files in which the computer systems showed that the homeowner had fulfilled a Trial Period Plan and was entitled to a permanent loan modification, but was nevertheless declined for a permanent modification during a blitz,” said William Wilson, a former case management supervisor for Bank of America, in his sworn affidavit.

A blitz, Wilson clarifies in his statement, is the process by which the bank “cleans out” the backlog of HAMP applications, by denying every application older than 60 days, including files for qualified applicants that submitted all of the necessary paperwork.

"During a blitz, a single team would decline between 600 and 1,500 modification files at a time for no reason other than the documents were more than 60 days old" Wilson writes. "Bank of America instructed its CRMS, underwriters and other employees to enter a reason that would justify declining the modification to the Treasury Department. Justifications commonly included claiming that the homeowner had failed to return requested documents or had failed to make payments. In reality, these justifications were untrue."

Wilson said he personally reviewed "hundreds" of HAMP applications that qualified for a permanent loan modification but were denied during a blitz.

"We were told to lie to customers and claim that Bank of America had not received documents it had requested," said Simone Gordon, a former senior collector at Bank of America, in her sworn declaration.

Gordon said she saw "hundreds of customers" in the Bank of America system that had successfully completed their trial period, but were denied a permanent loan modification.

According to a statement from the bank, issued to Bloomberg, the declarations are "rife with factual inaccuracies."

According to the U.S. Department of Treasury, as of April 2013, HAMP assisted more than 1.2 million homeowners nationwide in navigating the loan modification process since the program began in March 2009. In April 2013, the HAMP program was involed in 870,038 active permanent modifications at that time, while an additional 67,855 homeowners were in the midst of the trial period.

Neither Appau nor Hinson have submitted a trial payment yet, as they are taking the advice of foreclosure counselors wary of the bank’s alleged scheme to gouge customers during the loan modification process.

Appau said she’s optimistic the bank will approve her loan modification.

Kleinman said Tuesday’s protest and meeting sends a strong message to Bank of America executives that homeowners “demand a more fair servicing process.”

“People are paying attention and won’t tolerate neglect from their mortgage servicers,” he said. “I think today was a very healthy step in the right direction.”

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