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Allegations of Misconduct by Bank of America Employees

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 short saleBy now, you may have heard the news. Former Bank of America employees allege that Bank of America gave incentives to employees for foreclosing on properties. According to Bloomberg:

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.


(photo credit)

Article originally published at


Melissa Zavala 

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Andrea Swiedler, Realtor, Southern Litchfield County Real Estate

2017 President, Greater New Milford Board of Realtors

2017 Connecticut Magazine 5 Star Realtor


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Coldwell Banker Residential Brokerage

Litchfield County Regional Office,375 Danbury Rd, New Milford, CT 06776


© Andrea Swiedler 2009 - 2017

 Always do right. This will gratify some people and astonish the rest. - Mark Twain

Comment balloon 6 commentsAndrea Swiedler • June 26 2013 05:56AM


Dean, Dean, I hate to admit it, but I've reached an age where NOTHING surprises me any more.  Sad, but true.  

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) over 4 years ago

Andrea:  As a Lender myself, but one that works in a smaller company, I'm often left wondering at what size the fear of the government no longer effects you.  Anyone I've ever worked for was a small outfit ... and fearful not to cross their T's and dot their i's multiple times just to make sure they weren't stepping out of line and in jeopardy of losing licenses.  Hearing stories like this just makes me cringe (and I'd say fairly often nauseous too) as clients and referral partners do not often distinguish between Lenders.  They just lump us together.  Problems, such as this, make my job harder and many days ... fairly unpleasant.  I just wish someone held these people accountable ...


Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 4 years ago

Andrea- good reblog.  The 6 inch rule reminds me of the Grisham novel the Rainmaker.  

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) over 4 years ago

Andrea -- am wondering if any of the "loan officers" who should have been registered with NMLS will be losing thier registration over these events.

Posted by Steven Cook (No Longer Processing Mortgages.) over 4 years ago

Roger, Roger, the only thing in life that would surprise me is to hear you beat Mickey at Rummy. 

Gene, I do extol the virtues of our local lenders who do portfolio loans. For a reason... because they don't pull this crap on people who are in dire need of help. This just frosts my buns.

Kathy, I remember that seminar I went to, and I was shocked that it was public knowledge but nothing was done about it. Same thing here...  some poor slob following orders to keep a job will take the heat perhaps.

Stevven, I am sure no one except the bottom of the food chain will pay for these and all the other "mistakes".

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Coldwell Banker Residential Brokerage) over 4 years ago

Dean, Dean, you made me LOL..................

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) over 4 years ago