New Bank of America whistle-blower emerges: More customer abuse secrets

[Fire Walk With Me]

http://www.salon.com/2013/06/28/new_bank_of_america_whistle_blower_emerges_more_customer_abuse/

Now, another new lawsuit, featuring a separate whistle-blower, contains additional remarkable revelations – and may shed light on Bank of America’s strategy in getting out from under the mountain of legal exposure and costs in which it now finds itself. Simply put, the bank seeks to pocket quick cash and evade practices set forth in major settlements – by cashing out of the subprime mortgage servicing business. The result would be to leave struggling homeowners back at square one, with even fewer protections to avoid foreclosure.

First, some background. Over the past year, non-bank servicers like Nationstar and Ocwen have been buying up servicing rights to millions of mortgages, gradually positioning themselves to become the biggest companies in the space. These non-bank servicers, which process monthly payments and deal with foreclosures but do not originate loans, have an asset not available to their big bank colleagues: They haven’t yet been officially caught scamming customers. Therefore, they are not a party to the various servicer settlements brought by state and federal regulators, and they need not submit to those settlement guidelines. This includes rules like establishing a single point of contact for borrowers, stopping foreclosure operations when a modification is in process (ending what is known as “dual track”) and facilitating proper payment processing.

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And some complaints have gone to court, like the case of a Florida widow who claimed that Green Tree debt collectors called her husband, as well as his co-workers and relatives, nine times a day about a mortgage debt. Nationstar and Ocwen have seen their share of complaints as well. One innovative Ocwen scam involves sending homeowners a check for $3.50, and claiming that cashing the check automatically enrolls the customer in an appliance insurance plan, which costs $54.95 a month.

Here’s where Bank of America comes in. According to a bank insider, this is part of a deliberate effort to flip the servicing rights for a quick buck and get out from under the scrutiny of the various settlements. “Brian Moynihan, Ron Sturzenegger and Tony Meola are well aware of the reputations of these servicers,” says the insider, referring to Bank of America’s CEO and two high-level executives. “Ron is a dealmaker, not an operations guy. He was brought in to sell the stuff.”

(That's a bit disjointed but there is so much at the link, just please read it. And move your money out of bank of america if you already haven't, please.)