When it comes to providing a steady stream of blog fodder concerning highly publicized bungled foreclosures, Bank of America is a gift that keeps on giving.
A bankruptcy judge issued a $45 million fine against Bank of America Corp., calling the bank's treatment of a California couple who fought to save their home "brazen" and "heartless."
Judge Christopher Klein of the U.S. Bankruptcy Court in Sacramento said the bank's mortgage modification process and mistaken foreclosure on Erik and Renee Sundquist's home left them in "a state of battle-fatigued demoralization."
The size of the fine is intended to send a message to the bank.
The fine money, earmarked mostly for law schools and consmer advocacy organizations, is meant to be large enough that it won't "be laughed off in the boardroom as petty cash or 'chump change'," Judge Klein said in the ruling, published Thursday.
Judge Klein also lambasted BofA for something we discussed in a recent post: a corporate culture gone off the rails.
"It is apparent that the engine of Bank of America's problem in this case is one of corporate culture...not rogue employees betraying an upstanding employer," he added.
As might be expected, the bank strongly disagrees with the judge, but declined to state whether or not it would appeal. Perhaps they'll heed advice my late father offered me: "Sometimes, it's best to quit while you're behind." In what might be the Platonic ideal of the concept of "understatement, a spokesperson for the bank uttered, "Regrettably, the customers had a challenging experience."
- The borrowers, the Sandquists, stopped making payments on their home loan only after the bank informed them that they would not be eligible for a loan modification as long as they were current on their loan. That sounds like a familiar trip through the looking glass for many during the most recent mortgage modification insanity.
- The bank "routinely either lost or declared insufficient, or incomplete or stale or in need of resubmission or denied without comprehensible explanation," the Sandquists' 20 loan modification requests.
- Notwithstanding the couple's filing of a bankruptcy, which by law automatically stays foreclosure proceedings, the bank foreclosed on their home and gave them an eviction notice.
- The couple moved out, and Ms. Sundquist was hospitalized with stress-related heart attack symptoms several weeks later.
- Bank of America officials later reversed the sale. The couple wasn't formally notified of the change but moved back in several months later, the ruling said.
- In the interim, the couple's homeowner association fined them $20,000 for dead landscaping.
"There comes a point at which this case is reminiscent of Watergate: the denial and coverup becomes worse than the crime," Judge Klein said of the bank's behavior after the foreclosure mistake.
I don't know if I'd go that far, seeing as I'm old enough to have actually watched the Watergate madness unfold during law school and it seemed a heck of a lot worse than this kerfuffle, although unlike a former US president, I did inhale in those days, so my memory may be hazy. Regardless, the piling on of error-after-error causes one to wonder: Could a pet parrot be involved?
How many times have we been down this road with the bank that bears the name of the land I like to call "'Murica"? Well, in addition to the link immediately above, at least here and here and here and here. There might be more, but we've run out of time and space.
Judge Klein also takes a shot at the bank's regulators for failing to protect borrowers from these mind-numbing shenanigans. While I'm not known for cutting regulators slack, in the case of Bank of America and some of its brother banking behemoths, I've come to the conclusion that no regulatory regime could keep a handle on them. It's akin to trying to teach close order drill to The Keystone Cops. No matter how many times you drill them, the very instant you take your eyes off of them, they break into a Pan-Asian Fire Drill.
Their repeated failures to learn from their mistakes and clean up their acts gives support to those, including folks as different as Gary Cohn and Elizabeth Warren, who want to break them up.