FT Alphaville was all set to work through the early morning examining the release of allegedly damning documents relating to the actions of Bank of America Merrill Lynch or its subsidiaries in the ongoing struggle to provide settlements in the foreclosure crisis.
In the end, the midnight EST release of internal emails from November 2010 via the hacker group Anonymous by a former employee of Balboa Insurance proved far less interesting than some feared and others hoped. A BofA spokesperson on Monday said “we are confident that his extravagant assertions are untrue,” reports Reuters.
(Reminder: Bank of America inherited Balboa in 2008 through its acquisition of Countrywide. It sold the credit insurance arm to QBE in February.)
But a quick overview of what has alleged and what was evidence may be of use as we continue to cover the wider — and more egregious — aspects of foreclosure troubles and Hamp failures.
In other words, if you have Wikileaks-fatigue, look away now; this is just an attempt to square accusations with what was released.
The post on the site where the emails are hosted effectively has two sections. First, emails between the whistleblower and Anonymous that show his motivations for contacting the hackers. Second, an internal email chain from the erstwhile BofA subsidiary.
In the first part, as this email shows, accusations are made that include:
1. Balboa and/or Countrywide deliberately withheld information from regulators during the “federal takeovers” of IndyMac Federal and Aurora Loan Services.
2. Balboa and/or Countrywide falsified loan paperwork and made covering adjustments in their internal databases so as to proceed with foreclosures that should not have taken place.
3. Balboa and/or Countrywide reported “incorrect volumes” to lenders and regulators to avoid fines for not meeting its timeline for loan modifications.
4. Balboa and/or Countrywide adjusted terms for commercial real estate clients while denying assistance to individual borrowers.
The second part of the site posts internal emails from one chain (“GMAC DTN’s for Image Removal – Urgent Request”) among Balboa employees. We’ve posted the text below in chronological order, with names and salutations removed:
The following GMAC DTN’s need have the images removed from Tracksource/Rembrandt. [List of document numbers follows.]
I have spoken with my developer and she stated that we cannot remove the DTN’s from Rembrandt, but she can remove the loan numbers, so the documents will not show as matched to those loans.
I will need upper management approval from… since this is an usual request, before we move forward.
Where will these letters show up then?
The letters will not show in Rembrandt if you search by loan number. If you search by DTN, you will find the document, but it will not be matched to any loan.
Approved.
I’m just a little concerned about the impact this has on the department and company. Why are we removing all record of this error? We have told XXXX, and there is always going to be the paper trail when one of these sent documents come back, this to me, seems to be a huge red flag for the auditors: example: a scanned document that was mailed to us asking why the letter was received when the letter, albeit erroneous – this being the letters that went out in error – the auditor sees the erroneous letter but no SOR trail or scanned doc on the corrected letter is in the SOR and scanned in). What am I missing? This just doesn’t seem right to me.
It’s hard to conclude anything from this email chain that supports the accusations outlined above. Accusations 1, 3 and 4 are not covered.
Some letters appear to have gone out in error from Balboa to — presumably — mortgage holders. This dispatch was then seemingly recorded on the firm’s internal database. The removal of this record was then approved, according to the chain.
This could be a case of employees trying to cover their backs due to a basic clerical error or it could be the proverbial tip of an iceberg. But there is no evidence presented that the latter is the case. This release is referred to as “part 1″ so maybe there will be more.
There is a lot wrong with the foreclosure process. And forced insurance sellers such as Balboa often do not provide a good deal for borrowers, as we noted back in November (though Dodd-Frank should reduce the worst excesses). In the month before that, as part of our ongoing coverage of the Hamp fiasco, we quoted Ahmerst Securities’ Laurie Goodman who said:
Another possible explanation [for its foreclosure moratorium] is that Bank of America owns Balboa, a property and casualty insurance [P&C] company. When the borrower stops making his mortgage payment, he generally also stops making the tax and insurance payments. Bank of America force-places the P&C insurance with Balboa, at rates well above that charged by other property and casualty insurance companies
… Evidence of above normal rates on this forced-placed insurance comes from an internet posting that has been making the rounds. This site highlights an actual affidavit with a number of inconsistencies. It’s a good read, in any case. But what caught our eye was the monies owed for the 27 month period 12/2007-2/2010. This included insurance of $33,775 that had been advanced on, a charge of roughly $15,000 per year. A non-random survey of Amherst employees who failed to leave early for Columbus Day weekend indicated most faced a homeowner’s insurance charge of $2500-$5000 per year. So—Bank of America may be in a bit less of a hurry to liquidate than other servicers who do not own such an entity.
But unless we’ve missed something, the documents released last night added little to our understanding of a complicated and sad story that continues to blight ordinary Americans and the US economy.
Related links:
Assange backed (in)securities – FT Alphaville
Mortgage scandal du jour – forced-place insurance – FT Alphaville
An Interview With WikiLeaks’ Julian Assange – Forbes
That mysterious missing mortgage note – FT Alphaville
Those blemished Countrywide credit loans – FT Alphaville