In what has been the biggest housing market collapse since the Great Depression, banks have made a business in collecting and cashing in on foreclosed homes.
In a Wells Fargo bank in Charlotte, N.C., “legal process specialists” are expected, if not demanded, to produce ten to eleven affidavit reports a day, reports that bank lenders use in court in the foreclosure process.
These “foreclosure foot soldiers” are under such pressure to meet daily quotas that “they are likely making mistakes that inadvertently could toss a family out of its home and onto the street,” MSNBC reports.
A Wells Fargo whistleblower told MSNBC in January some of her troubling observations: “Some families apparently were denied loan modifications after only cursory interviews,” she said. “Other borrowers applying for help sent comprehensive personal financial documents to a fax machine that she discovered had been unattended for weeks. Others landed in foreclosure after owing interest payments of as little as $1.18 a day, according to documents she said she reviewed.”
“There was one file where they weren’t even past due and they were in foreclosure status,” she added, citing that bank management pushes to get more files out the door, leaving much room for error.
Contributing to this problem is a misalignment of incentives. Typically, mortgage management companies collect a small fee for each current loan. Foreclosed loans, however, generate a multitude of revenues, from legal fees, late charges, home inspections and maintenance. Just last year, the mortgage service business accounted for $3.3 billion in profits for Wells Fargo — 20 percent of the bank’s net income, according to its annual report.
Filing for foreclosure on a home has, in some instances, become more about data entry than about each specific case.
Executive vice president of Wells Fargo’s Home Mortgage Default Servicing, Michael DeVito, contends that the process the bank uses is built around catching errors.
“It’s got redundant checks in it to ensure that the documents going out the door are accurate,” he told MSNBC. “And the process is built to help the team member build the personal knowledge they need to sign effectively.”
“No one here is asked to sign anything they don’t understand. Period. End of story,” he continued. “There’s no production quota and if a team member says, ‘I don’t understand this I’m not going to sign it,’ that’s fine.”
Foreclosure processors at Wells Fargo say otherwise, however, telling MSNBC that they often get emails midday asking for a surge in affadavits to make sure they process at least ten cases.
“They’re pushed to do numbers,” said a manager at the office who wanted to remain anonymous.
Emails obtained by MSNBC document the quotas. “You must sign at least 10 NEW files every day,” one email read. “Less than 10 is unacceptable.”
Even more troubling is that entry level employees are given titles of “vice president” in order to sign off on the documents.
According to MSNBC, “Legal processing specialists sign affidavits in the presence of a notary and swear under the penalty of perjury to the best of my knowledge, information and belief that the contents of the foregoing paper are true.””
Then to meet state foreclosure law requirements, the processors sign their affidavits as “vice president of loan documentation.”
Problems with housing foreclosures have not gone unnoticed by government officials. Last year, the Treasury Department cracked down on by the eight largest banks for foreclosure malpractice, yet problems within the system remain.
The Department of Housing and Urban Development, responsible for waste and fraud abuse in among lenders, has been monitoring the problem for two years, when problems of document fraud from the top banks surfaced. But even recently investigators found that Wells Fargo processors “signed the great majority of the judgment affidavits without personal knowledge or otherwise verifying the data and information.”
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