A HUD watchdog report was released Tuesday, according to Reuters
showing that Bank of America, Wells Fargo, JPMorgan Chase and other banks hindered an investigation into their foreclosure practices. The investigation was due to claims that the banks had signed foreclosure documents using "robosigners" which illegally do not review the documents for accuracy.
Rather than cooperating, the banks paid large settlements to provide relief to homeowners affected by mass foreclosures.
David Frahm of Bank of America responded to the accusations:
"Bank of America fully cooperated with the HUD Office of the Inspector General's review of mortgage servicing practices and any suggestion otherwise is both inaccurate and inconsistent with how we work with all regulators."
However, a report from the U.S. Department of Housing and Urban Development
said that Bank of America had lackluster paperwork, providing only file excerpts and partial documents rather than the full documents requested. Employees were disallowed to answer many questions and reluctantly gave only a few interviews. Eventually, the Department of Justice
had to be brought in to subpoena the bank for testimonies and secure documentation.
JPMorgan Chase refused to appoint anyone to discuss the matter and provided incomplete records, often completely refusing to discuss details of the few documents they produced.
JPMorgan Chase had no comment.
Wells Fargo did not comply with requests in a "timely manner" and refused to allow many employees to be interviewed. Eventually, some interviews were allowed, yet the report claims the "delays may have limited the effectiveness of those interviews."
The reports showed that the banks did not review the facts in foreclosure documents, did not cooperate with customers who tried to avoid foreclosure, and had weak internal controls. For instance,
"[Bank of America] had no effective quality assurance function."
Wells Fargo hired inexperienced foreclosure processors, who had previously worked as daycare workers, department store cashiers, pizza restaurant employees, and factory production line workers. They were not provided training before being assigned to sign affidavits.
A notary had revealed that the daily volume of documents rose from 60 to 20,000 which could not have been effectively reviewed.