Why I haven’t written about the declarations by ex-Bank of America employees.

A couple of Mandelman Matters readers recently contacted me to ask why I have not yet written about the declarations by ex-Bank of America employees that say, among other things, that the bank was offering incentives, including gift cards to Target, to foreclose rather than modify.  These declarations were made public a couple of weeks ago by attorneys that on August 1st, will be seeking to have their lawsuit certified by the court as a class action lawsuit.

In addition, it appears that at least one additional lawsuit has already been filed in Colorado that’s intended  to ride on the coattails of this suit and the ex-employee declarations.  And that’s certainly not a surprise.  The hope is that, should the one suit get certified as a class action, then the other will ultimately get consolidated… and away we go.  The answer is money… what was your question?

To answer the question of why I haven’t written about the lawsuit that’s based on the declarations by ex-Bank of America employees, it’s important to first understand what class action lawsuits are really all about.

Class action lawsuits should be about a large group of people teaming up against a large corporation to right a wrong… BUT THEY’RE NOT.  In practice, class actions have become a way for opportunist lawyers to essentially shake down corporations for large insurance-funded settlements… and in almost all cases, they put millions into the pockets of the lawyers while the actual class members end up with next to nothing.

Remember the class action against Netflix back in 2005?  When it settled the lawyers received $2.5 million, while the poor schmucks that were the class members got their Netflix accounts upgraded for a month… except for the named plaintiffs who split about thirty grand.

Oh yeah, and after that one glorious upgraded month ended, by the way, if you forgot to manually downgrade your account, you started being charged more each month for the upgrade.  Do you call that a settlement?  I don’t.  I call that a sleazy marketing program.

I also recall a class action lawsuit against Wells Fargo in California a few years back because I remember hearing from homeowners who as class members received… are you ready?  They received eligibility for a HAMP modification.

Eligibility for HAMP?  That’s like telling a 65 year-olds in this country that what they’ve “won” is eligibility for Medicare.  (I don’t actually recall what the lawyers got from the settlement, but I’d bet big money that the check was for seven figures.)

The bottom-line is that class action lawsuits these days are never about justice for the consumer or compensating class members, and I have no reason to believe this one is any different.  The lawyers suing Bank of America based on these declarations by ex-employees didn’t release the declarations the way they did a few weeks ago to benefit homeowners… they did it purely in an attempt to intimidate the bank into settling sooner rather than later to avoid the bad press.

Now, I recognize that in this country there’s nothing wrong with lawyers making their livings this way… it’s certainly not illegal.  But, don’t kid yourself… they’re not filing this suit to benefit homeowners who were wronged by the alleged behavior… and they know that homeowners have no chance of coming out winners monetarily.  Only the lawyers will win if and when this class action settles, just like all the others.

Other than helping the lawyers who are filing this suit, these declarations by ex-employees are meaningless… they can’t help anyone… they are not “evidence” of anything… they have not been subject to cross examination by anyone.  They’re simply statements signed by clearly disgruntled ex-Bank of America employees who are motivated by money, and who knows what else.

And, although I don’t know who actually authored them, but after reading the statements, I don’t believe for a minute that they were written by people who were working for maybe $15 an hour at Bank of America in 2009, 2010 or 2011.  I say that because I had occasion to call Bank of America in those years, and the people I spoke with could barely string enough words together to form a complete sentence… in English, that is.  I’m sure had they been speaking in their native tongue, they’d have done much better.

Of course, it’s understandable that many of the homeowners who suffered terribly while attempting to get their loans modified by Bank of America or anyone else for that matter back in 2009 – 2011, have viewed the declarations by the bank’s ex-employees as vindication… proof that they weren’t crazy… “evidence” that the bank that was doing all those things that sounded so implausible to others on purpose.  Now they could prove that it wasn’t their fault that they lost homes, it was part of Bank of America’s well-executed evil plan.

Well, I just didn’t think homeowners needed any sort of vindication in the first place.

Of course, HAMP was a train wreck from day one, and homeowners who applied for loan modifications went through hell, but to my way of thinking, that was primarily a failure of government.  HAMP was a government program, remember?  It was introduced by President Obama who said that all we had to do was call our banks directly and the banks would modify our loans.  I watched him say it.  So, why aren’t we all at least as furious with the government as we are with the banks?

I mean, it’s 2013… five years since HAMP was launched, and there’s no question that the government knows exactly what’s been going on in the loan modification process often, if not always.  So, there’s been plenty of time for the government to step in and fix things… and yet they’ve done nothing.  Of the $37 billion that was allocated for the HAMP program, maybe a billion or two has been spent.  So, what does that tell you about where foreclosures rank in terms of this administration’s priorities.

Honestly, I can’t remember my government ever under-spending to that degree in my lifetime.  And forget about HAMP for a minute… had congress made $37 billion available for the care and feeding of HAMSTERS, and five years later it came out that only a couple billion had been spent… there’d be people marching in the streets screaming their heads off about how the government has discriminated against and been cruel to hamsters.

But since we’re only talking about homeowners here… well, I get it.  We’re not as cute and fuzzy and you can’t watch them run in those wheels.

And please… let’s not forget Fannie and Freddie… they’ve certainly been as inflexible and intolerant as any servicer ever considered being, as related to loan modifications, shouldn’t we be at least as angry with them as we are with Bank of America?

After all, Fannie and Freddie became insolvent in 2008 and were taken over by our government.  We now guarantee their bonds just as we do bonds issued by the U.S. Treasury.  They own at least 65 percent of the mortgages in this country, and are directly responsible for many of the foreclosures to-date.  Why is that okay with anyone?  Why isn’t anyone suing them for failing to modify loans for homeowners?

Do you know ow easy it would have been for Fannie Mae to make sure their loans were modified by their servicers?  Fannie publishes a servicing guide that’s over 1200 pages long, so if they wanted their loans modified, it couldn’t have been that hard to add a page in the front that said, “Modify loans owned by Fannie Mae for homeowners at risk of foreclosure or we’ll make you buy them back.”  And presto… modifications would have been popping like popcorn.

Instead, their policies related to those who defaulted on their mortgages made sure that borrowers were treated like the deadbeats that Fannie clearly believe they are.  Just ask Fannie Mae if it would be alright for you to arrange for an arms length transaction whereby someone buys your home as a short sale and agrees to rent it to you for five years, after which time you can buy it back… and their answer will be a resounding, “No, that’s against our policy.”

Why not? Why would Fannie care who would be renting a home?  I asked that question to a Fannie Mae representative a couple years ago and he explained: “It’s just our policy.”  So, I asked… what if someone bought my home as a short sale and then let me live in a tent in the backyard and just come in to use the facilities?  No, again.  It was just their policy.

So, I tried this one: What if the person who bought my home as a short sale didn’t own a car, so he let me park mine in the driveway from 8PM to 8AM so I could sleep in it overnight?   And he hung up on me.

Don’t kid yourself… that’s not a “policy,” it’s a punishment for being a deadbeat who couldn’t afford his or her home.  I’m pretty sure, that Fannie Mae would prefer that if they own your loan and you lose your home to foreclosure, that you not even been seen hanging around the neighborhood anymore.

I don’t really know by what authority Fannie Mae thinks it’s allowed to punish anyone… I had always thought that in this country punishments were the exclusive purview of the judicial system.  Fannie and Freddie, after all are only bankrupt mortgage companies whose shares in 2009 were trading for less than Blockbuster Video’s, another bastion of insolvency.

And because the two broken behemoths have been allowed to foreclose essentially at will, we the taxpayers have paid millions to mow the lawns of vacant homes they couldn’t sell.  If that doesn’t make you want to smack whoever’s running Fannie with a good size stick, then you’re just friggin’ Gandhi.

Fannie’s former CEO, Daniel Mudd is facing a lawsuit brought by the SEC that accuses him of hiding billions of dollars worth of exposure to sub-prime loans leading up to the Fannie’s collapse in 2008.  According to the complaint, the SEC not only wants Mudd fined, but they want him permanently banned from running public companies… any kind of public company.

Mudd stands accused of telling investors and the government that Fannie’s $200 billion investment in risky assets was nothing to worry about… and he said these things at the same time he was directing Fannie to invest in reduced-documentation loans, and routinely reviewing Fannie Mae’s subprime data, and certifying the company’s fictional filings.

A recent article appearing in Bloomberg/BusinessWeek about how Mudd is doing these days began by saying: “In the cherry-paneled library in his six-bedroom house in Greenwich, Conn., with his arms stretched high above his head, Daniel Mudd is…”  Actually, he’s back in home loans, doing mortgage industry consulting and working out of his 15,000 square foot home, so very well done there.

Now, let’s get back to what I’m supposed to be really angry about… disgruntled ex-Bank of America employees who basically claim that people were offered gift cards for doing their job faster.  I’m sorry, but if your job was to foreclose, then it’s not hard for me to imagine that a manager in a company with 400,000 employees, just might come up with the idea of offering incentives for increased performance.

I’m not saying that was what SHOULD have been going on, but if the government wanted to make HAMP modifications mandatory, then that’s what they should have done… in 2009… or 2010… or 2011.  Or, how about now for God’s sake.  Instead they made the program a “voluntary concession” on the part of the banks, and so that’s what we got.

If our government wants seat belts to be installed in cars, they make it a law.  If they don’t want cigarettes advertised on television, they make it illegal.  Factories polluting our rivers and streams… federal legislation with multi-million dollar fines.

But if they want to prevent four million people from losing homes to foreclosure they just jot down some general guidelines and tell the banks to do whatever they want, whenever they can get around to it?  I see… well, thanks Mr. President.  Nice to know that you’re looking out for the common man.  Bang-up job so far, Barry.

Bank of America Responds…

So, last week, Bank of America filed their response to the declarations by the ex-employees with the court, saying, among other things that the ex-employees had “wildly misrepresented their duties at the bank” and declared that the claims they made were “impossible.”

Bank of America’s filing, as pointed out in an article in the Huffington Post, also states that six out of the seven who signed declarations had reason to lie because they were fired for various reasons including “inappropriate behavior, threatening a coworker with violence, and bullying.”

The bank’s filing also claims that there will be other bank employees that will say very positive things about how Bank of America handled modifications, and that “employees were often contacted directly by borrowers wishing to express thanks for their help on HAMP applications.

The overriding point I’m trying to make is that the statements made by the ex-Bank of America employees are not depositions… there’s been no cross examination… I have no way to assess the credibility of those making the claims against the bank.  Both the ex-employees and their class action attorneys have plenty of motive to embellish facts or even outright lie… they’re hoping to win millions, after all.

Could Bank of America also be embellishing or lying in their response… of course.  It’s obvious that both sides have ample motive to act in their own best interests, and should the case move forward, then we’ll see what evidence is presented and which side’s claims seem more credible.  As of today, however, I have no more reason to believe one side over the other.

I’m watching a fight for millions in cash that involves banks, pissed off ex-bank employees, and class action lawyers… and I’m supposed to be able to pick out which one is telling the most truth?  Isn’t that like asking me to pick pepper out of fly shit, if you’ll pardon the phrase?

Clearly, the bank’s lawyers were going to deny the bank’s involvement, and discredit the ex-employees… which is exactly what they did.  But I’ve also been an employer for 25 years, and I know what disgruntled ex-employees are capable of saying if there’s money on the table.  They can be just as full of crap as anyone else and often are.  And don’t even get me started on the reputations of class action lawyers who are undoubtedly dreaming of new homes, boats and cars as they go to sleep each night.

And I’m wondering something… what if credible evidence shows that, as the bank is claiming, six of the ex-employees were in fact fired for things like, “inappropriate behavior, threatening a coworker with violence, and bullying?”  Those are pretty serious causes for dismissal, right?  I don’t know about you, but I would be unlikely to believe someone who was fired for anything like that and then was motivated by money to make accusations against their previous employer.

But, you see… even though that might make the statements by the ex-employees highly suspect, homeowners would still believe them in large number, I would imagine.  Because no matter what these six or seven said… we all know what happened starting in 2009 as related to loan modifications.  It’s not like they had to have special inside knowledge to come up with their statements… so even if they’re lying their asses off… it wouldn’t change a thing.

Except for the lawyers hoping to become the next “members of the banking class,” of course.  

It’s no secret that since the very beginning the loan modification has been… let’s just say somewhere between less than ideal to utterly deplorable… not just at Bank of America, but at Wells Fargo, Chase, GMAC, OneWest Bank, and all the rest.  And I think it’s safe to say that everyone who has had even a passing interest in the foreclosure crisis knows that, so homeowners can rest assured… they’ve long since been vindicated.

It certainly wasn’t the fault of homeowners that we lost over six million homes to foreclosure since the crisis started.  And anyone who thinks otherwise has the IQ of a potted plant.

Truth be told, however, I don’t actually care who wins the lawsuit either.  Don’t get me wrong, I would care a whole lot if the money won would be going to homeowners who were harmed by the bank… whether by it’s malfeasance, incompetence, or indifference.  In fact, there’s nothing I’d like to see more than those that were forced to endure the sheer hell of the loan modification process in 2009 and 2010, be awarded checks… and the more zeros on them the better, as far as I’m concerned.

But, that’s not what’s happening here.  Not even close.

So, as far as why I haven’t written about the declarations as so many others did… well, it’s simply because there’s no point in doing so except to help the lawyers behind the class action… and I’m just not of a mind to do that.

Mandelman out.