* Bank says ex-workers made “wild misrepresentations”
* Lawsuit claims bank wrongly denied loan modifications
* Hearing on class certification set for Aug. 1
By Jonathan Stempel
July 12 (Reuters) - Bank of America Corp rejected allegations that greed and bad faith drove the bank and its workers to push distressed homeowners into foreclosure, rather than help them obtain loan modifications to which they were entitled.
The second-largest U.S. bank made its argument in court filings on Friday, in an effort to prevent homeowners who claim they were harmed by the bank’s practices from suing as a class.
Such claims were raised in a nationwide lawsuit accusing Bank of America of failing to comply with the government’s Home Affordable Modification Program (HAMP).
The homeowners had last month offered sworn statements from several former employees who claimed that the bank offered incentives, such as $500 bonuses or gift cards to Target Corp and Bed Bath & Beyond Inc, to lie to homeowners and stall HAMP applications because foreclosures or in-house loan modifications could be more profitable.
In filings with the federal court in Boston, Bank of America said these “demonstrably false” allegations were offered to suggest it had acted with “indiscriminate (and inexplicable) corporate malevolence,” and ignored the “obvious administrative challenges” of complying with HAMP.
It also said the former employees had a “significant motive” to make the allegations, given that at least six of the seven had been fired for “inappropriate” behavior.
“The declarants’ wild misrepresentations about their roles lead to impossible claims about what they did and saw,” the Charlotte, North Carolina-based bank said. “(They) would not have witnessed such things in any event because Bank of America’s actual practices were diametrically opposite.”
Bank of America also added that “empirical data” showed that HAMP modifications “were in fact more profitable.”
The federal government created HAMP in 2009 to encourage banks to help struggling borrowers stay in their homes.
Steve Berman and Gary Klein, who are among the lawyers representing the plaintiff homeowners, did not immediately respond to requests for comment.
The statements from the former employees also alleged that Bank of America falsified data it gave the government, saying it had given out HAMP loan modifications when it had not.
One former employee said that the bank would twice a month conduct a “blitz” to clear out its HAMP backlog. This employee said a team would in a blitz decline 600 to 1,500 modification files at a time solely because documents were more than 60 days old, even if all required documents had been submitted.
Jinja Martin, a Bank of America business control executive, in a Friday filing said “blitzes” were in fact done to track down information needed to evaluate HAMP applications, and help the bank give homeowners a chance to qualify for the program.
U.S. District Judge Rya Zobel has scheduled an Aug. 1 hearing to consider class certification.
Mortgage problems have dogged Bank of America since its 2008 purchase of Countrywide Financial Corp, once the largest U.S. home loan provider. The purchase cost just $2.5 billion, but has since cost Bank of America tens of billions of dollars for litigation, loan buybacks and other mortgage expenses.
Bank of America was among five companies in 2012 to reach a $25 billion settlement with regulators to address foreclosure abuses. The attorneys general of New York and Florida have since accused the bank of violating terms of that settlement.
The case is In re: Bank of America Home Affordable Modification Program (HAMP) Contract Litigation, U.S. District Court, District of Massachusetts, No. 10-md-02193.