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Posted on Feb 6, 2014

Lac-Bac (CC BY 2.0)

By Barbara Garson, TomDispatch

(Page 2)

“So that’s when I went to all those different government agencies,” she told me.  (Actually, some were community groups, but the confusion was easy enough to understand.) “I waited all day in Pittsburg,” she continued, mentioning a nearby city in the San Francisco Bay Area.  “All those people getting money from the federal government saying they are helping people with modifications.  They wouldn’t even talk to me—said I wasn’t eligible.”  That was true since HAMP modifications were only available to people who were assessed as having a good likelihood of repaying a new mortgage.

But along with the do-gooder organizations that told Alice she wasn’t eligible, the inevitable do-badder outfits had sprung up to help people through the HAMP application for a fee.

“So I hooked up with Help-U-Modify,” Alice went on, “and they charged me $3,500.  Come to find out, Help-U-Modify wasn’t even licensed.  They was taking people’s money—they’re still taking people’s money—but they don’t do nothing.  Do Obama know what’s going on?” Mrs. Epps wailed.

When I remember that wail—and I remember it too often—I think of Russian peasants asking whether their “little father,” the Czar, could possibly know that his Cossacks had shot them down when they came to his palace with a petition.

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Within days of our conversation, Alice Epps lost her home.  It took a full year and a half before Balty Alatas finally got a definitive rejection from Bank of America.  

Five years later, I learned that its modification morass had been far more calculated and vicious than anything Balty Alatas—or I—suspected.  The bank had hired a firm called Urban Lending Solutions to set up an operation that was authorized to call itself “the Office of the CEO and President.”  As part of a deliberate subterfuge, HAMP applicants like Alatas were “escalated” to this “Office of the CEO” located in Colorado. (Bank of America’s actual headquarters are in North Carolina.)

An investigative article at Bloomberg News has since revealed how Urban Lending employees sent modification applicants requests for unneeded documents at regular 30- or 60-day intervals, how they falsified or destroyed records—sometimes merely to meet work quotas—and how they responded with “inaccurate statements” to congressional representatives or banking oversight officials who inquired on behalf of individual homeowners.

If a letter of inquiry from a congressman or a regulator’s office was “dry signed”—that is, computer generated—it would be answered with boilerplate doubletalk of the type Balty Alatas showed me.  If it had been signed personally—“wet signed”—it was to be forwarded to the bank’s lawyers who were presumed better qualified to spot possible legal problems.

The signatures of some senators, including Harry Reid from the top housing-bust state of Nevada and Carl Levin of Michigan, were enlarged and pinned on a wall so that employees could better recognize their personally inked signatures.

I don’t know whether other big banks created fancifully named “offices of the CEO.”  But the complaints of underwater borrowers and mortgage modification statistics suggest that Alice’s and Balty’s experiences were the norm.  Six million nine hundred thousand Americans applied for HAMP modifications.  Only 13% of them were granted one, and 22% of those who got a modification had their homes foreclosed anyway.  At Bank of America that figure was 33%.

Bloomberg News concluded:

“Instead of helping homeowners as promised under agreements with the U.S. Treasury Department, Bank of America stalled them with repeated requests for paperwork and incorrect income calculations, according to nine former Urban Lending employees. Some borrowers were sent into foreclosure or pricier loan modifications padded with fees resulting from the delays.”

Why should any of us be surprised that private banks perverted a government debt relief program?  From their perspective, it made good business sense to encourage homeowners, by whatever means, to continue their mortgage payments while occupying and keeping up their property during the turbulent period after the housing bust of 2007-2008.  A more advantageous time to foreclose was when home prices had stabilized and banks could incorporate any foreclosed properties into newly profitable investment vehicles like, for instance, the rental-backed securities that may replace the mortgage-backed ones that were such hot items for financialization before the crash of 2008.

The Blame Game

Balty Alatas never complained to me about the government.  He understood that it was a bank—or rather the real estate trust that held his mortgage—that was denying him relief.  Other HAMP victims tended to conflate the government and private banks into a generic “they.”

A church-going black woman who had applied for a HAMP modification from Wells Fargo assured me that, after the way “they” had treated her, she definitely wouldn’t vote for President Obama again.  Her minister had a different but no less devastating way of describing the two HAMP partners. “Obama,” he said, “was the shepherd who delivered up a couple of our weaker members to the wolves.”

In a somewhat similar fashion, the Affordable Care Act delivers millions of us up to insurance companies.  The administration was embarrassed when its website couldn’t shepherd new customers to the companies fast enough because of computer bugs.  Now that it’s working as it’s supposed to, the real embarrassments begin.

We’ve already seen the president take full blame for assuring people that, under the new law, they could keep their old policies if they chose.  Apparently he didn’t anticipate that, in the months between the passage of the Affordable Care Act and its implementation, insurance companies would rush to sell policies that didn’t meet the minimal standards set in the law.  Insurance companies knew that they would have to cancel these and other non-compliant policies as soon as the law went into effect.  In the meantime, however, what a great two-fer: first you get to collect and invest the premiums, than you get to stick it to your government partner by announcing to customers that their policies are being canceled thanks to Obamacare.


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