Journalism in the Public Interest

BofA Blames Investors for Lack of Loan Modifications, But Evidence Points Elsewhere


Bank of America's top mortgage official Barbara Desoer testifies before the Senate Committee on Banking, Housing ad Urban Affairs. (Photo courtesy of the Senate banking committee)

Update 4pm: We've updated this headline to better reflect the story.

In prepared Congressional testimony coming today, Bank of America’s top mortgage official, Barbara Desoer, says it’s Wall Street investors, not the bank, that are making it hard to help homeowners. “Bank of America is constrained by our duties to investors,” she says. “Many investors limit Bank of America’s discretion to take certain actions.”

(You can read her prepared testimony and watch the live webcast once the hearing starts later this afternoon. And definitely watch to see if she uses that line, and how she explains it.)

Desoer’s testimony echoes what homeowners have long heard, that investors are frequently denying them help from federal program created to foster loan modifications. But as ProPublica has reported, that's simply not the case. Investors rarely have a say in loan modifications or block such modifications.

Banks and other companies service mortgages on behalf of investors who bought bundles of loans sold on Wall Street. Bank of America and others say that the contracts they sign with investors frequently limit their ability to make modifications. But a recent study looked at the contracts covering subprime deals from 2006—at the height of the boom—and found that only 8 percent actually prohibited modifications.

The contracts sometimes had some limitations on modifications, like saying the servicer couldn’t extend the term of the loan, but almost two-thirds of the contracts explicitly gave servicers the authority to make modifications, particularly for homeowners who had defaulted or would likely default soon. The rest of the contracts did not address modifications. (Here are some tips for digging up the contracts yourself.)

Though they point fingers in public, servicers almost never blame investors in their monthly reports on the modification program, according to data Treasury gave to the Congressional Oversight Panel.

Today the Association of Mortgage Investors released a statement saying, mortgage investors “share many of the frustrations that homeowners and state Attorneys General are experiencing when dealing with mortgage servicers.”

Many investors want more modifications and have been putting legal pressure on mortgage servicers to improve their operations. As we wrote in July:

“This is one of those rare alliances where investors and borrowers are on the same page,” according to Laurie Goodman, senior managing director at Amherst Securities, a brokerage firm that specializes in mortgage securities. She says investors have “zero vote” in determining individual loan modifications and, instead of foreclosures, prefer sustainable modifications that lower homeowners’ total debt.

Our story focused on Arthur and Alberta Bailey, a couple trying to prevent foreclosure on their home near New Orleans. Litton, the subsidiary of Goldman Sachs that serviced their loan, told the Bailey’s that investors didn’t allow any modifications. But Litton’s contract with investors had no clear language banning modifications, and data Litton provided to investors showed that over 115 other mortgages from the same investment pool had already been modified.

We first looked at this issue last summer, soon after the Obama administration launched its loan modification efforts. We flagged the complex web of interests as a potential problem. You can listen to that story, which was co-produced with Marketplace, to learn more.



Does this news surprise anyone? Back before the news of robo-signing etc. , I sent in a “qualified written request” (QWR), asking just 1 thing…who was the owner of my note. I did this only for the purpose of being sure if I were to sell my property I might have a “clear title”; and to know who to contact if negotiations with BoA broke down concerning issues of my loan modification.
For my inquiry BoA sent me a letter stating they had placed a “credit block” on my account…and credit bureaus reported in my file BoA had reported me as having “disputed amount owed”.
I am simply amazed at how these bank officials can either outright lie, or spin the story to favor their actions.
What totally enrages me is my hard earned tax dollars have made it possible. Only in the good ole’ U.S.A.!!!!!

Given the fact that Fannie Mae and Freddie Mac own so many of these mortgages, why has Treasury not put the loan modification decisions in their hands, especially in light of the fact that the taxpayer has been subsidising Freddie and Fannie with billions of taxpayer dollars?  Obviously, the loan servicers have a strong financial interest in not making modifications and it seems to be just another case of the politicians creating a program for political purposes without careful forethought of how it should work for the benefit of the intended beneficiaries.

I have a long complicated story of trying to get a modification, but on one point specifically, BofA has agreed to a HAFA short sale—however, in the past 7 days alone, I have counted 13 calls from their collections department. When I speak with them, they advise that collection activity continues even if you are in foreclosure or short sale—one department cannot be expected to know what the other department has agreed to (?). This has been going on for MONTHS and I am losing my mind.

In case you missed the video you can watch it here.

This kind of behavior is exactly the reason we abandoned Bank of America as our bank. We wanted to send them a message that treating consumers and customers unfairly has consequences.

Barb Desoer has one heck of a nerve peddling that lie in (sworn?) testimony in the U.S. congress. How far in do you have to be to lie to some of the highest elected officials in the land?
BOA lies when they brag about their rework rate, by far the lowest of any servicer.
Sneering Brian Moynihan, who announced he would “not put up with it” need a firm spanking.
I am just the gal to do it!
Before the board cans him, let’s send him a message.
Move your money and stop writing him checks.
Pay your taxes and insurance and maintain the property.
Let him come to you, hat in hand, and YOU can decide if you are going to put “up with it.”
Sorry, Brian. Not liking your loan offer. Thanks, but no thanks.
Remember, what goes around comes around.

Re. the Hearing. It maybe my English but if I understood correctly David Lowman made it clear front of the Committee today Chase will not offer principal reduction. He stated Chase offer forbearence but not principal reduction.

On the other hand Bof A Ms Desoer stated Bof A is offering principal reduction.

Did I understan this correctly from David Lowman?

Please someone explain.

In his earlier testimony on April 13th and Jun 24th 2010 David Lowman has told Congress Chase offers principal reduction. I wonder what made him change his testimony. Could it be that I have sent 3 letters to him which he never responded and enclosed his earlier testimony?

So my opinion is if you are a Chase customer forget about a principal reduction.

The congressional hearing last night was quite the show.  Desoer lied, Lowman lied.  I don’t know why that is surprising.  It’s expected. 

The best advice was to establish a stand alone entity that would modify loans.  Get it out of the servicers hands, they are not in the business of modifications.  The lies about how the banksters want to keep people in their homes was nauseating.  It was, however, challenged when Diane Thompson challenged that statement by offering evidence of banksters adding exorbitant fees, forcing people into foreclosure. 

The discussion of clear title was a key issue. One solution would be to allow a bk judge to hear cases solely on foreclosures and have the ability to modify the loan, reduce the principal if necessary.

Ricki - when collections call you, please don’t let them upset you. Tell them you are in a workout with the bank and to stop calling you.  Tell them according to the fair debt collection practice act, they are not allowed to call you between 8 am and 6 pm Monday through Friday. If they violate your request, you will file a complaint with the FTC.

We have helpful information on a forum at beingmiddleclass dot org.  We welcome your comments and opinions.

Good Morning everyone;

I was just reading Yahoo and came across this article that I am sure We will all be interested in knowing. Bank of America is an outright CRIMINAL!!!

She also blamed BofA’s employees for their foreclosure problems, including the handling of HAMP.

“Hell is empty, all the Devils are here”.

      Shakespeare-The Tempest


Nov. 17, 2010, 10:20 p.m.

Is not perjury to lie under owed?  Why the law does not apply to this Banksters?  What bunch of Liars! On top of Lying under owed at her congressional testimony
Here are some of their usual Lies:
1-Your file is in review, (20+ times)
2-The investor does not approved a modification (but when you request to know who is the investor they send you a letter stating that now you may qualify for a modification)
3-It did not pass the NVP test (when you request in writing that they send you their NVP test calculations and you get it all calculations are wrong, coincidental?)
4-We have not received the documents we requested (they tell you that after you sent the same documents they requested time after time)
5-You modification its cancel because you did not submit the documents on time (even that you have proof with fax transmitions etc and with dates when docs where sent not once but many)
6-You do not qualify for a modification but when you ask for the guidelines to find out why you do not qualify or mention that according to HAMP you do qualify then they said that they will review your case (again)
7-Not enough income ( but when you review the income they have in the system is all wrong even that you sent them your pay stubs more than 10 times)
And there is more…. but it will be to long to write here
Don’t believe anything these Banksters tell you, get inform, Read the articles in Pro publica, and, watch the Dylan Ratigan Show on MSNBC, Go see the movie (documentary) Inside Job,, Read the book 13 Bankers, write your congressman, Get inform!  The more informed the American People are the more difficult will be for these Banksters and servicer’s to Lie and steal the wealth from this country and the middle class

I have been working on a modification with B of A for over a year.  I have been borrowing to pay the mortgage until my spouse can secure a job.  The house is still valued less than the mortgage.  Just tonight, B of A says they have no paperwork or records of my numberous calls to them.  Now my credit rating is shot and three attempts to refinance have been declined.  I don’t want to just walk away, but B of A is just going to win.


Nov. 17, 2010, 11:03 p.m.

On my previous comment i wrote sorry it should say


Nov. 17, 2010, 11:08 p.m.

Scott don’t let them win keeps copies of everything you send and proofs that they received them (fax transmissions sheets etc) fight !  If you send everything again send it also certified mail,, they are lying don’t believe everything they tel you, get inform don quit !

Scott Bloom - I know how you feel.  Banks are rarely doing modifications, that is well documented on the internet.  Whenever I sent the paperwork to Skank of America, I sent it via certified mail, return receipt requested.  Then when I called, I got the name of the person, documented it, and most of the time, recorded the conversation.  I didn’t plan on using the tape recordings in court so the legal aspect was not at issue, the recording was mainly for me to document the conversation. 

I tried for a year and a half to work with Skank to modify my loan.  Both my husband and I work and proved we were able to make a modified payment.  Our jobs were good and the outlook that we would keep our jobs was good, but that wasn’t enough.  I borrowed from credit cards to make the payment, borrowed from my family and watched my house value drop by 50%.

I stopped borrowing the money to pay the mortgage and stopped making the payments because I realized I was fighting goliath and the chances that David could win this one were slim to none.  We have been saving our money to get a rental.  They can have the house, but I have my sanity back.  We have our lives back.  We have our health back.  The bank took an awful lot from us but we will not let them take our lives.

I sincerely wish everyone the best of luck in getting the loans modified and if I can help, please visit beingmiddleclass dot org and we will do whatever we can to help you.

nissim sasson

Nov. 19, 2010, 6:20 p.m.

Here is another one from these Banksters do to their customers they tell you “Don’t send in your payments because we’ll either send them back or put them in your suspense account, which doesn’t get credited to your account anyway” This way they create so many late fees interest and penalties that it becomes impossible for the borrower to become current or save their home from foreclosure because by then, the debt is incredible bigger compare to the debt when the borrower started requesting help, Loan Modification or the HAMP and then, they FRAUDCLOUSE !. (After they foreclouse, Banksters makes thousands of dollars when they Fraud-clouse on the property by sticking the toxic asset to the tax payers via treasury department and collect the AIG insurance on top of the cash money the Bnaks receive form the sale of the property ) what a scam

Nissim, that is exactly correct.
The first step in the banksters plan is to tell you that will not help you until you miss a payment.  As soon as you miss your payment, they can take your house.

The banksters took out insurance, mostly through AIG, which as most know it us the US taxpayer who owns AIG now, against loss. 

If you have a $200,000 loan and your house sells at foreclosure for $100,000, the bankster files a claim with the insurance company for the $100,000 deficiency.

HAMP is a scam. 

The banksters are debt collectors.  Sometimes they do own your loan, but they are usually just the one who collects your payment and sends it to the investors.  The banksters get paid a fee for servicing your loan and they also make money by adding on late fees, inspection fees, BPOs, etc.  If, for example, Bank of America services one million loans that are in default and are able to charge $50 for a “drive by inspection” 1,000,000 x $50 = $50,000,000.  That’s fifty million dollars. Not too bad, right?

That is only one of their “junk” fees.  Imagine how much more money they make when they add in a 5% late fee, BPOs, etc. 

This is the biggest fraud in the history of the US.  The savings and loan scandal resulted in thousands of people going to jail.  Not one, NOT ONE person is in jail.  Why is that?  The government and the banksters are synonymous.  That’s why.

Well said, Lori.

Rickand Lori I agree, Here is another one:
Another big problem with Loan Mods, is that the Banksters and Servicer’s have a dual track system on one track system they are processing a Loan Modification (while the banks makes it hard for the borrower to get approved)  In another track system they are foreclosing on the homeowner, This dual tracking system should stop immediately, while the borrower is trying to get approve for a Modification or its in the process, they should not do the foreclosure process in another system at the same time , One very good solution to this mess is to take away the Loan Modification program from the servicer’s completely and give it to and independent agency that can be fair and balanced


Nov. 20, 2010, 12:52 p.m.

Here is more on the foreclosure mess

BOA denied my HAMP mod in writing and in the letter they stated

” based on the NPV results, the owner of your loan
has not approved a modification “

In the letter and by HAMP rules, they said

I can , within 30 calendar days of the date of the notice, request the date the NPV test was
completed and the values used to populate the NPV input fields .

The purpose of providing this information is to allow the borrower the opportunity to correct values that may have impacted the analysis of the borrower’s eligibility.

I have requested this information in July, the day I got the letter, and I have requested at least 10 more times , getting every excuse possible including

”  My investor has the NPV details and they are the ones in charge of sending it to me, it is completely out of Bank of Americas hands”

I contacted my investors, Bank Of New York Mellon and to my surprise they called me back in one day!

Melissa J. Adelson, from The Bank of New York Mellon told me that they most certainly do NOT have that information, nor do they make those decisions, nor do they deny loan mods ( which BOA told me in writing as well, that my investor denied the mod ). She said, as we all know, that BOA as
their servicer makes all those decisions “for them “.

HAMP is a scam. There is no other way to describe this failed program.  Bloggers met with Treasury officials who admitted that this program was nothing more than a prop for the banksters. 

Dual track system - if you watched the congressional hearings, Desoer stated that the dual track system was a problem but not sure how to fix it.  There are members at beingmiddleclass dot org who were on a trial program, forbearance or some other work out plan and the bank forecloses anyway.  BOA, etc. are debt collectors.  They will continue to blame the necessity of following the investors guidelines and foreclose regardless of whatever workout program you are in.

I have a friend who was denied HAMP due to NPV results.  I do not believe she was ever considered for HAMP but rather Skank of America gave her the family and friends plan, the in-house mod where they make more money.  I think it has been almost a year she has been demanding the results of that test.  She still has not received them.

It is no secret:  the banksters control this country and the housing market.

nissim sasson

Nov. 21, 2010, 2:03 p.m.

Complaint to your congressman write, filed, complaints all over the place ,If thse people (gov, congress)receives enough complaints they will have no choice but to listen, It is the only power we have left

I have written to Congressman Conaway, State Senators Cornyn and Hutchison, the OCC, and about two dozen more.  I do hope someone eventually listens and puts a stop to this madness.

We have been jerked around by BoA (previously jerked around by Countrywide) literally for years.  here is our story, simply put.

1)Predatory lending by Countrywide.  Yes, we were stupid and fell for it.  No real raise in 4 years for our income.  Any increase goes toward health insurance and medical bill increases.  Had a hard time making ends meet, called Countrywide.
2) Countrywide says send documentation and we’ll see if you qualify.  Credit card debt keeps going up and 3 months later we are told we don’t qualify, no programs available for us.
3) BoA acquires Countrywide- “You are pre-approved for a mod, don’t make a payment. Send 25 pages of information and you’ll hear from us in 4 weeks.”
2) BoA- “Why haven’t you made a payment?” they ask 6 weeks later, “We have no record of a modification in progress, we never received any information from you.”
3)Borrow money to get caught up, then 2 months later we are told we qualify for a mod again.  This time did not miss any payments.  Sent in another 25 pages of info. Credit card debt continues to rise.
4) Credit cards raise interest rate to 29% (OMG, thanks Obama, who we voted for) and we can no longer afford even the minimum payment on 2 of the 3 cards.  They won’t budge even though we tell them we will have to stop making payments.
4) BoA- “Sorry you don’t qualify for a mod” no explanation. We obtain a Realtor to sell the house that we love so much.  Whoops, can’t sell house.  It isn’t worth enough to cover the payoff, commission, and moving.
5)Stopped paying mortgage and hired an attorney.  We are now at the point that our credit is trashed, and BoA is saying the investor, Hudson City, won’t allow a mod.  We found Countrywide falsified our documents with an inflated original purchase price, an inflated value by about $65k, and we have no HUD-1 closing document.
6) So much stress in our home.  My husband and I are sick all the time now; stomach ailments, achy bodies, headaches, heart palpitations, etc.  He beat cancer in the past and I worry about the stress and what this will do to him.  We have young children who we are trying to protect from the stress as much as we can, but life could be better for everyone.
7)We are now well-educated in the mortgage process, as well as the corruption of the American Banking Industry and the American Government.


I’m starting to look into a re-fi, so that I can get my money away from these jerks.

One guy I talked to told me—-which I suspected—that in order to accomplish ANYTHING with these banks, you pretty much have to hire a lawyer to handle it all for you.  He outright told me they WILL NOT cooperate with the consumer.

Nice, huh?

I’m not interested in a mod—I just want to lower my payments and (mainly) get my money away from BarfA.  Good luck, everyone!

J-Mo - if you can qualify for a refi, you do NOT need a lawyer.

If you attempt to get your loan modified,  you do NOT need a lawyer.

the loan mod process is grueling and very unstable, but you can go it alone.  If you need assistance, please come over to being middle class dot org and we will do what we can to help you.

Susan - are you a member of bmc?  Is beyond helping you?  Is there something else we can do to help you?

Lori, thanks.

I’m NOT interested in a loan mod, because I KNOW it is a scam. I have a fixed rate mortgage now, and this guy was basically describing an ARM.  I’ve moved on.  Just thought the info was “interesting.”

I’m in talks with 2 banks about a re-fi, but I’m not moving forward until Spring.

I appreciate your response.

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

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