B of A Doublespeak

By James Kwak

Investors are claiming that Bank of America’s servicing operations are milking delinquent mortgages to earn fees rather than either foreclosing or modifying the mortgages. Bank of America’s defense?

“We have no financial incentive to keep mortgages on the books longer. Isn’t it better to modify the loan and keep people in their homes rather than foreclosing?”

I’m glad you feel that way. Then why do you have the second-lowest permanent modification rate of the seventeen servicers and two other servicer categories whose data have been released by Treasury?

37 thoughts on “B of A Doublespeak

  1. It’s the basis of HAMPscam. String along distressed mortgages with the lie that you’ll modify them. The real goal is to foreclose, but later. In the meantime you try to deter walkaways in order to squeeze out as many payments as possible.

    It’s bankster-government collusion against the people (and against the investors, too; of course many of the institutional investors are deploying the people’s money as well).

  2. that is right, Russ. the temp mods were always a means of extracting what cash a homeowner has and then – presto! – a denial.
    they just want someone in the house, keeping the lights in and the maintenance up.
    Bend Over America – move your money from these thieves right now.
    and stop writing checks, Florida. pay taxes, insurance and maintenance costs. say no to BOA, I did. let them come to you (they will.)
    no. more. checks.

  3. That’s really the money quote from B of A. The second sentence blatantly contradicts the first. (Why not foreclose if you have no incentive to keep the mortgage on the books?)

    Does Ms. Desoer even bother to think about what she says to the NY Times?

  4. no shoot, Russ. Here @ ground zero, Orlando, we see no need to wait for official mortatoria via gov.’s office.
    we just stop paying. the roof does not cave in.
    BOA called politely, twice, to suggest I reapply for HAMP.
    hmmm, maybe. we’ll see. no rush. you kept millions waiting. now you can cool your well-shod heels.
    I bought my after- foster daughter a (used) car. she is struggling to stay in school, a worry. and I am shoring up savings with my mtg. money. a better use for it.
    loading up annuities per attny suggestion, it is out of reach if deficiency vultures ever try to peck my eyes out. sorry, fellas. no low-hanging fruit for you.
    bite me, BOA.
    rework me and my (terrible) 2006 mtg. terms, or talk to the hand.
    Pres. Obummer, and your little cool friend, Timmy G., enjoy the karmic blowback (politically, not personally.) go about your clueless business. whatevs.
    I am taking my financial life back.
    and hey, BOA, nice stock price there! payback’s a witch.

  5. Whalen has been terse about B of A. Their efficiency (the amount it takes them to make a dollar) is near the break-even point. In other words, they’ll be unprofitable very shortly. He points out they do not have the warm bodies to process the loans, and the ones they do have are not warm enough – they don’t have the expertise to work on these refinances. They’ve been turned into REITs, something they’re ill-equipped to handle.

  6. I believe that B of A has quite a bit of second lien paper on its books. Not quite in Wells Fargo territory, but avoiding write-downs on those seconds is the smoking gun, I mean, er, financial incentive.

    But, hey, walk a mile in their moccasins. From the vantage point of a space alien, those guys are trying to run a home lending operation with no capital, no overhead, no lines of authority, in the middle of a tangled web of conflicts of interest. Under the circumstances, they can be proud of their league standings in the Treasury tables.

    Perhaps in a more rational world, Corrections Corporation of America would set up a mortgage servicing operation using inmate labor and Chicom seed money. They would even put Angelo Mozillo in charge of it.

  7. “and hey, BOA, nice stock price there! payback’s a witch.”

    Thanks! How’s that economy working out for you? Shame if anything were to happen to it. We’ll be at the Fed rate window, expecting our usual bonuses this Christmas.

    Bank of America

  8. I love it. When banks speed foreclosures they’re attacked. when they slow foreclosures they’re attacked. Enough of the loony conspiracy theories.
    I think what’s overlooked is speeding foreclosures to market have a cost banks don’t want to deal with in the current environment. I fail to see the benefit of foreclosing fast in order to stack up unoccupied homes onto the real estate market. And no, banks aren’t going to become landlords. Unoccupied housing is subject to vandalism and maintenance, all while they have no clue when it will move and at what price. Add to that unoccupied homes bring down home values throughout a neighborhood, thus leading to more homeowners walking away from their own mortgages. Banks typically have other mortgages in the same neighborhood.

  9. Anyone have a copy of the letter to post to Scribd or other site? The devil’s in the details…

  10. Here’s my – well really my wife and brother-in-law’s – anecdotal story about an encounter BoA. Will try to make it short.

    Their self-estranged aunt with alzheimers was living in her home in Ossining, NY. She passed away alone in the house and neighbors notified the police when she was not seen for several days. This was mid summer last year.

    Somehow Ossining PD got a hold of my wife through our local PD and thus began a long – and moderately expensive – investigative saga.

    Turns out she had a reverse mortgage with BoA that, including some odd transactions, left the home essentially underwater not to mention in need of maintenance. No other “assets”.

    There was interest in the house from locals due to location and it was obvious from early on that gaining administrator status over the house and trying to settle the debt via sale would result in little if any profit – and likely a loss even to us. But we felt it was the right thing to do and profiting from this sad state of affairs was not a consideration – doing what we felt was the right thing was.

    BoA was in no way helpful and was even a downright obstruction.

    Screw them – the house went through last winter “open – literally”, without heat, and I trust the pipes burst, etc. All yours BoA.


  11. Seems to me all the Repubs have to do is stick it to BOA and they make Obama and the Dems look just as corrupt as they really are (and in fact both major parties are).

    I don’t think there’s a chance in hell the Republicans will do that, of course, but gee, it would be nice if SOMEBODY stuck up for the millions of Americans and thousands of neighborhoods, including mine, that have been been robbed by the criminal banksters.

    I really don’t care which of the so-called major parties does it. Thanks to the (non)performance of the Democratic party, I’m now a registered Green.

  12. Yo, James. It is a commonly held canard here in Fla. that banks are double dipping -seizing (stealing) the house to re-sell *and* getting made whole (fully??) by mtg. insurance.
    PMI, etc.
    Is this true?
    Is there a double-dip?
    Even, in recourse states, a triple dip if they sue the ousted family for “deficiencies” – a padded bill of fees, penalties, interest and legal costs?
    Is this true – do they dip two and even three times per foreclosed house.
    Please look into this.

  13. We’ve talked about it for a long time on this site. I think we even talked about switching your money over to Credit Unions on this site long before Arianna Huffington acted like it was an original idea. If Arianna Huffington has enough celebrity power to get it going, it’s all hers.

    It doesn’t take a rocket scientist to figure out when NCUA Credit Unions offer lower rates on loans, higher rates on savings and checking, vastly superior customer service, a large group of depositors with government jobs (stable employment and conservative lifestyle), offers free gifts and lotteries for nice prizes just for showing up and breathing at their annual meetings that they are the better choice.

    Why are you staying at the big banks??? For the fun of ATM fees?? Overdraft charges?? The dry roto-rooter stuck into your anal canal as they say “Mr. Smith we’re here to help the community develop. Oh by the way, we’ll be selling your mortgage to a servicer (located in the opposite region of the country) 5 seconds after you signed your mortgage documents. Would you like some bad coffee and a pen that never works?? You know, we paid for those cheap pens by offering you crappy rates on your checking!! It’s your lucky day!!!”

    Do yourself and the world a favor. Join an NCUA member Credit Union. Talk to them and 90% of the time they will find a way to get you in.


  14. @starbrite:

    Try taking your evidence to William Black. He was the ace regulator during the S&L crisis in the 80s and is actively calling for BOA to be taken over by the FDIC now.

  15. I have valued doing the right thing most of my life.

    But doing what would ordinarily be the right thing vis-a-vis BofA or any of the other TBTF is just downright idiotic now. You did the right thing by sticking it to them.

  16. If it was me, and I wasn’t thinking about the next inhabitant (who has nothing to do with BofA’s irresponsibility and blase attitude to society) I would have urinated in each room and left an unfingerprinted/unsigned love note to the branch manager. But Hey, there you go…. that’s just me. Remember, I’m not encouraging anyone in similar situations to do such a thing…. really.

  17. according to the 1949 Novel by George Orwell:

    “To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which canceled out, knowing them to be contradictory and believing in both of them, to use logic against logic, to repudiate morality while laying claim to it, to believe that democracy was impossible and that the Party was the guardian of democracy, to forget, whatever it was necessary to forget, then to draw it back into memory again at the moment when it was needed, and then promptly to forget it again, and above all, to apply the same process to the process itself — that was the ultimate subtlety; consciously to induce unconsciousness, and then, once again, to become unconscious of the act of hypnosis you had just performed. Even to understand the word ‘doublethink’ involved the use of doublethink.. “

  18. I guess the big banks would not to be attacked in any way, if they had thought about the quality of the mortgages, instead of being in such a big damned hurry to package them into garbage CDOs and sell them. Or even if they had bothered to have proper capital on the books for what the banks were fully aware were garbage tranches inside the CDOs. But it’s nice you can sympathize with the poor, abused the big banksters. You must have such a kind soul.

  19. Since the games began long ago, the chant now is “let the games continue.” We are being gamed into oblivion within the plutocatic state known as America. Yes, Ted, the credit unions are the only banks which are dealing properly, but then most of them are depositor owned, as opposed to the biggest banks. Small banks are obviously in peril, and banks like BOA are gaming the system to the max, which they have been doing for more than a decade now with the cooperation of our political leadership. And, why would BOA modify when they can game to the max and know that their flawed (Countrywide) paper is actually unenforceable to boot. Let the FED pick up the slack that Fannie and Freddie can’t any more. Why risk having to take back fraudulent paper after all?

  20. I must admit there was a time when I felt no sympathy for people behind on mortgages and underwater in their home. None. Hey… you borrowed the money, pay it back.

    I have since turned about 180 degrees.

    To the BOA’s of the world I say: Look, you wrote the fine print, now live with it. No mortgage payments coming in? Too bad. Go get the house and best of luck trying to sell it. And BTW, how’s that loan-loss-reserve thing working out for you these days?

  21. Customers-from-Hell can call this toll free number if they have a specific question; keep in mind the number is not a communication forum for ranting and offering worthless advice: (800)669-6607.

    Jaime Galbraith (economist) made an interesting observation: Galbraith insinuated in a recent interview that Obama himself knew the unemployment rate would go above eight percent but declaring that it would not, to his voting base, in the hopes and political calculation would help fellow Democrats in their mid-terms by continuing to blame current economic conditions on the previous administration. Galbraith also asserted the notion that it was most, if not all, of the banks’ fault for this economic crisis; was Galbraith present when Congress took the initial vote on TARP; then the second round of votes to pass TARP. The banks would not be where they are today without the help (and bribing) of Congress. It may have started with the scummy loan officer but it did end with the POTUS, on Nov 2nd.

    It’s pretty hilarious that the NY Fed, Pimco, and other investors want Bank of America to take back those mortgaged backed securities: (1) look up contract law and see what it says; (2) The bank will win not because not that they deserve it or have better lawyers, but your tax dollars have already been set aside (unused portions of TARP) for possible future scenarios like this one (implicit govt guarantees already discussed); (3); try taking huge hair cuts you greedy investors; and, (4) the other half of the foreclosure crisis is the untold story of how Congress willingly continues to outsource everything (first manufacturing, then IT, and now intellectual properties); they want to turn this economy into Walmart; using the company as the new gold standard.

    Jaime Galbraith should be giving some advice to Bernanke now that Senator-elect Rand Paul may actually try and apply to some of those Libertarian principles. It will be interesting to see what the Senator-elect from KY will say on Sunday’s program along with Reagan budget director David Stockman; will they try and insist on a zero-based budgeting for Congress. Ron Paul’s advice to his son, aim towards shutting down the Federal Reserve but first make nice with the mainstream media.

  22. One thing that many educated people on both the left and the libertarian right can agree on: we need to shut down the Fed and get our monetary system out of the hands of private bankster.

  23. The razzle-dazzle bs continues

    looky how smart I am about the math – texas hold um and tell me under which cup the ball is

    is for retards compared to computer powered “where is the mortgage note?” protected by Homeland Security’s super-secret agents PAID BY GLOBAL BANKSTERS.

    Who is walking out of this carnage of razing USA infrastructure and destroying FAMILY HOMES as filthy rich psycho pigs? And who did they get to man the phones to terrorize people behind on their payments?

    And who figured out how to create this UN-NATURAL unemployment number of 25%

    Who started all this and WHY?

    I would not BANK on no one figuring it out – especially since many already have…

    It’s the WAR, stoopid.

  24. The good old days….

    “Bank of America’s history dates to 1904, when Amadeo Giannini founded the Bank of Italy in San Francisco to cater to immigrants who were denied service from other banks.[24][25] Amadeo was raised by the Fava/Stanghellini family when his father was shot while trying to collect on a $10.00 debt.[citation needed]

    When the 1906 San Francisco earthquake struck, Giannini was able to get all deposits out of the bank building and away from the fires. Because San Francisco’s banks were in smoldering ruins and unable to open their vaults, Giannini was able to use the rescued funds to start lending within a few days of the disaster.

    From a makeshift desk of a few planks over two barrels, he loaned money to anyone who was willing to rebuild. Later in life, he took great pride that all of these loans were repaid.

    In 1922, Giannini established Bank of America and Italy[26] in Italy by buying Banca dell’Italia Meridionale,[27] itself only established in 1918.[28][29]



    First time I came across the author. (Saw him on TVO.org) It helps me Jake Chase’s darker comments on this blog.

  26. Ok…. I wasn’t gonna do this. I don’t know, I try to stay away from getting too political on this blog, cause I think we’re trying to make mainly objective arguments on economics and having an “equitable” society on this blog. But I can’t resist putting this Rachel Maddow video up. I thought she stated herself well, defending her friend/colleague, but still supporting the NBC News policy. This one is for you tippy.

  27. Bank of America Edges Closer to Tipping Point

    Nov 3, 2010 – Bloomberg – excerpts

    “The problem for anyone trying to analyze Bank of America’s $2.3 trillion balance sheet is that it’s largely impenetrable. Some portions, though, are so delusional that they invite laughter.

    The only certainty is there is none, aside from the knowledge that Bank of America’s top executives have no idea what goes on inside the bowels of their company. For all we know the stock could double, or be a donut. The fate of the financial system hangs in the balance. Once again, we’re all on the hook.”


  28. Forgive my limited financial knowledge, but why haven’t we forced the banks to re-finance every mortgage in the country? It would lower risk of default and stimulate the economy. It would force banks to use the money available to them that they currently aren’t using. As far as I can see, it’s just a lot of virtual transactions. What am I missing?

  29. If I am not mistaken, B of A and others do not want to re-negotiate for several reasons:
    -they would have to write down the losses on their balance sheets
    -they would likely have to re-negotiate principal, not just interest rates, with many homes because they have dropped so much
    -they are unable to even figure out who will be able to pay them back if they do give them a write down
    -they are hoping to be able to foreclose and make money back quickly to re-charge their balance sheets faster than monthly home payments
    -they don’t make any *more* money in the short term by re-negotiating. long term, maybe, but banks don’t care about the long term at this point. it’s quarter to quarter
    -they have to actually have their paperwork together to show they own the home, which they often don’t have. in foreclosures, the judge often times doesn’t care (see: Matt Taibbi’s recent article in Rolling Stone)

    other reasons, anyone?

  30. I see that banks have a lot of reasons for not re-financing. My question was why doesn’t the government force the banks to re-finance at the current low rates? The government seems to have provided the capital for it to happen profitably.

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