History repeats itself, what do lenders and insurance companies have in common?
Actually it doesn't come as a surprise. We all know the frustrations of home owners and agents alike and it makes no sense... or does it? Years ago I worked in the health care field. I was at a seminar with a former insurance company worker who detailed how claims were handled by many insurance companies. I wish I could remember if it was called the 6 inch rule or something else, but that seems to stick in the dark recesses of my mind.
Claim handlers were told to... throw away anything over 6 inches in the pile of claims on their desks.
And they got away with it. It was common knowledge, yet no one did anything about it. Keep resubmitting was the rule. And of course we know claims that cost the insurance company too much were denied for many reasons. We are talking about life and death here, not just a roof over the head.
So why are we surprised? Insurance companies got away with it for years, why not banks?
Bank of America, the second-biggest U.S. lender, rewarded staff with cash bonuses and gift cards for meeting quotas tied to sending distressed homeowners into foreclosure, former employees said in court documents.
Mortgage workers falsified records and were told to delay U.S. loan-assistance applications by requesting paperwork that the Charlotte, North Carolina-based bank had already received, according to statements from ex-employees filed last week in federal court in Boston. The lender improperly disqualified applicants to the Home Affordable Modification Program, or HAMP, according to a May 23 statement from Simone Gordon, a loss-mitigation specialist who left the company in 2012.
Bank of America Corp. is being sued by homeowners who didn't receive permanent loan modifications after making payments under trial programs, according to court papers.
Here is a statement from one employee: “We were regularly drilled that it was our job to maximize fees for the bank by fostering and extending delay of the HAMP modification process by any means we could.”
Are Allegations of Bank of America Misconduct a Surprise?
As someone that has contacted Bank of America countless times over the past few years, it is easy for me to see how information from the executive offices doesn’t make it down to the employees in the way that it is actually intended.
Real estate agents are frequently challenged when they call lenders with questions about programs such as HAMP, HAFA, or other programs, such as the Bank of America Cooperative Short Sale Program. Bank employees that answer the phone frequently are not privy to higher-level information that is required by the caller. Those employees that answer the phone may suggest, for example, that a short sale seller apply for HAFA, yet the same employee may not realize that the subject property will not qualify for HAFA because the loan balance is too high or because the property is actually owned by a non-participating investor, such as Fannie Mae. In fact, just the other day, we were told by a low level customer service representative at Greentree Servicing to send over a short sale package, when the subject mortgage loan was going to be paid in full. (Read: It wasn’t even a short sale!)
While it is shameful to think that individuals received rewards and bonuses at the expense of someone entering into foreclosure, it is also easy to understand (if you have dabbled in distressed properties) how getting the correct answers to your questions is even more challenging than driving the road to Hana. Have you been on the road to Hana with its 600 hairpin turns and 56 one-lane bridges? Navigating that road is often more simple than achieving success in short sales.
Article originally published at www.shortsaleexpeditor.com
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Andrea Swiedler, Realtor, Southern Litchfield County Real Estate
2017 President, Greater New Milford Board of Realtors
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