Are you one of the lucky ones? Have a good job, live in a nice neighborhood, enjoy your cozy home? Think foreclosure only impacts the reckless or the unemployed?
George Mahoney worked and saved and built his cozy colonial-style home in Lynnfield, Massachusetts in 1981. There, he and his wife raised three lovely daughters. For many years, the Mahoneys paid down their relatively small mortgage with their local bank -- a division of Bank of America (BofA). In 2007, they took out a second mortgage to help a daughter start a small business. Two wage earners, a great credit record -- the loan was a breeze. That was when the trouble began.
About a year after getting the second mortgage, BofA started notifying George that his payments were late. Soon they jacked his credit card interest rates from seven percent to twenty-eight percent. Next, they ruined his credit record. His Sears card dropped from a $10,000 limit to a $500 dollar limit. Then one day in the fall of 2009, BofA initiated foreclosure on the house he had built and owned for 28 years.
The only problem? The Mahoneys had never missed a single payment on either their first or second mortgage.
Initially, George thought the problem would be easy to fix. He went down to his local branch to get help, but the local employees were rebuffed by corporate headquarters. So he started getting a receipt for each mortgage payment and faxing it to BofA headquarters. He also started the first of thousands of calls. Usually, BofA staff would readily concede that he was right. But even if they initiated a "fix" it never lasted more than 90 days, when the saga would start over again. In the last few years, he has received foreclosure notices twice - most recently in October 2010.
"Banks shouldn't be allowed to ruin people's lives this way. My stress level for the past year and a half has been a 10 and my wife is a wreck," George explained. His wife, Marianne, confirms the toll the trial has taken on the family. "The whole thing is a nightmare. The stress we live under is unbearable and it's embarrassing too. No one can help us, no one can do anything and it's ruined our credit. I have always been proud to have perfect credit," she adds, the strain evident in her voice.
After receiving a foreclosure notice in October, hiring a lawyer to send urgent letters to BofA and even after repeated talks with top-level staff in the office of BofA President and CEO, Brian Moynihan, the Mahoneys are still in jeopardy.
Bank of America Fraudclosure Central?
Recently-released data from the Federal Reserve shows that BofA received almost one trillion dollars ($931 billion) in taxpayer assistance during the financial crisis. The Fed has also been investigating snowballing allegations of fraud in the foreclosure process, allegations that include false notarizations, false affidavits, accounting fraud, abusive fees, false practice of the law and more. Fed Board Governor Daniel Tarullo told Congress that the problems identified "raise significant reputation and legal risk for the major mortgage servicers... requiring immediate remedial action." But will it come in time to aid the Mahoneys?
The Mahoney's experience indicts endemic accounting problems at BofA. Payments are misapplied constantly and the default position is abusive foreclosure. The bank reports some 1.3 million customers behind on their payments, but can regulators trust any data coming out of BofA? How many of these people are trapped in the same hell as the Mahoneys?
In a lengthy interview with the New York Times this weekend, Brian Moynihan reviews his first year as BofA chief. "I feel proud of what we have done," he said. "You never want to have a customer feel that something isn't right." But given BofA's track record, Moynihan's cheerful "there is not a better job in the world!" tenor strikes a surreal note.
Help May Be on the Way
On Tuesday, Iowa Attorney General Tom Miller, leader of the 50-state task force on mortgage fraud, met with more than 100 people from 15 states. In the crowd were representatives from community, faith, and labor organizations, foreclosure victims and struggling homeowners from across the country.
Led by the feisty folks at PICO National Network, National People's Action and Iowa Citizens for Community Improvement, the participants presented Miller with hundreds of case files documenting foreclosure fraud, abuse and plain malfeasance.
The group burst into a spontaneous round of applause when Miller said in no uncertain terms: "We will put people in jail." Miller also said he supports a settlement with the big banks that requires significant principle reductions, loan modifications, and compensation for victims -- key demands of the community groups.
As the holidays approach, too many Americans will be losing their homes because of hard times. An untold number will be losing their home due to the fraudulent behavior and stark indifference of the nation's largest bailout-out banks. Let's hope the Mahoneys are not among them.