How Bank of America Twists the Record About Its Foreclosures

Last Updated Nov 16, 2010 7:29 PM EST

If corporate executives can't tell the truth, they should at least avoid mangling it.

That's what popped into my head after reading that top Bank of America executive Barbara Desoer is expected today to tell lawmakers looking into the foreclosure mess that the company hasn't illegally seized people's homes. Says Desoer, head of B of A's home loan division, in written testimony:

Thus far we have confirmed the basis for our foreclosure decisions has been accurate.
Note that B of A no longer says its foreclosure documentation was accurate, as CEO Brian Moynihan claimed last month after the bank restarted foreclosures in 23 states. That's because five days after he made that statement, the company admitted finding mistakes in its paperwork, including serious irregularities.

Desoer is trying to mitigate the damage by suggesting that while B of A's foreclosure procedures may be flawed, the company otherwise has a spotless record on this front. Wrong. Just last week a court allowed a San Jose, Calif., homeowner to reclaim her house after ruling that B of A and Washington Mutual, the bank's subprime unit, has illegally foreclosed on the property.

A 73-year-old Filipino woman made history when she became the first person in California to win her house back from her lender even after it was foreclosed in San Jose, California.

Palma is a cancer-survivor who lives on a fixed income. So, in 2008, she asked her lender to lower her monthly mortgage payments of $3,900 a month.

A year later, she said that her lender promised to send her a loan modification packet. Instead, a Coldwell Banker real estate broker came to her house to notify her that her house had been foreclosed at a Trustee Sale.

Such cases involving B of A are far from isolated. The company this summer foreclosed on a Fort Lauderdale, Fla., man -- even though he didn't have a mortgage and had bought the home in cash. Oops. The bank admitted the error.

The same thing happened to a Massachusetts couple earlier this year after B of A seized their future retirement home in Florida, which they had bought with cash and owned free and clear. The company had the wrong address. Double oops. Then there was Tuolomne, Calif., resident Nancy Willmes, who had to call her local TV news outlet for help after B of A foreclosed on her home even after she'd shown them documents proving she owned the property outright. Despite this evidence...

The bank proceeded with the foreclosure, placing ads in the local paper and nailing a foreclosure notice to her door.
"I called the title company, the title company called B of A, and they refused to rescind it," Willmes said.
B of A backed off after the media got wind of the case. The company also admits it wrongly foreclosed on Henry and Sharon Newman of Wilcox, Ariz. After the couple finished paying off a house they'd bought last year, the servicer handling the loan went under. B of A subsequently inherited the mortgage after taking over a part of the servicer. The bank then claimed the loan wasn't fully paid, refusing to halt foreclosure proceedings despite the Newmans providing documents showing they were the rightful owners. Indeed, the bank sent them no less than 13 notices of foreclosure and auction.


How does stuff like this happen? Simple, says bank lawyer Kevin Funnell, who has written at length about such cases:

[B of A] cared not a farthing for the facts. With idiotic bureaucrats like that in charge of the foreclosure process, who can't be bothered to deviate from their grossly incorrect perceptions because that might require them to put forth the wattage of brain power required to propel a toothpick around the inside circumference of a tomato can, you'd swear you were dealing with a federal government agency. But, no, this is private enterprise at its finest, folks.
People who testify before Congress typically take an oath (although a committee chair can waive the requirement). That means lying during such testimony is a crime. Now, I have no doubt that B of A attorneys have left Desoer and other bank executives enough legal wiggle room to sidestep charges of perjury.

Given B of A's record of repeatedly and willfully taking homes it doesn't own, however, Desoer's claim that "the basis for our foreclosure decisions has been accurate" is, at best, a slippery misrepresentation. At worst it's a lie.

Thumbnail from Flickr user Technochick; inside image from Flickr user Respres
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    Alain Sherter covers business and economic affairs for CBSNews.com.