Many Long Island residents, who are struggling with debt and trying to save their homes from foreclosure, may feel that the game is rigged against them. Unfortunately, they may be right.
Dozens of mortgage borrowers have filed a lawsuit against Bank of America, alleging that the lending giant forced them into foreclosure, despite their participation in a government loan-modification program. As part of their lawsuit, they recently introduced into court sworn statements from former Bank of America employees, who said that the company purposefully pushed homeowners into foreclosure and denied loan modifications to qualified homeowners.
The revelations have already caused at least one member of Congress to call for investigation into Bank of America's handling of the loan modification program. Bank of America denies all the charges.
The lawsuit concerns the government's Home Affordable Modification Program, or HAMP, which was launched in 2008 in the hopes that it would save millions of Americans from losing their homes as the fallout from the housing bubble collapse continued. Less than a million ended up getting permanent modifications. Under the program, the government paid lenders to modify loans under certain circumstances. Struggling homeowners could make payments under trial programs until they were approved for a permanent loan modification.
According to the borrowers who have filed suit, Bank of America committed foreclosure fraud, taking their trial payments with no intention of ever giving them a permanent modification. In fact, they argue, Bank of America gave its employees bonuses if they pushed borrowers into home foreclosure.
Long Island homeowners who are trying to stop foreclosure cannot always trust their mortgage lenders to respect their interests, and they cannot always trust the government to be an efficient watchdog against abuse. With reputable, professional help, however, they may be able to modify their loans or otherwise restructure their finances in order to stop home foreclosure.
Source: Salon, "Bank of America whistle-blower's bombshell: 'We were told to lie'," David Dayen, June 18, 2013.