Bank of America Corp. vice presidents knew employees were signing foreclosure documents without verifying their accuracy, and some vice presidents signed thousands of documents per month themselves, according to new federal reports based on employee interviews.
Wells Fargo & Co. gave lofty titles to employees without higher education or experience in order to allow them to sign documents, and ignored warnings that they couldn’t handle the workload, the reports state.
The reports from the U.S. Department of Housing and Urban Development’s inspector general accompany Monday’s filing of the $25 billion settlement with the nation’s five largest mortgage servicers in federal court.
They fault the banks for not having processes to make sure foreclosure documents were correct. They also provide specific evidence backing up the claims state and federal authorities have investigated for more than a year.
For example, Wells hired a pizza-shop employee to be a vice president in charge of signing loan documents. At Bank of America, an employee said she signed 20,000 documents per day.
The housing department issued individual reports for Bank of America, Wells Fargo, JPMorgan Chase & Co., Citigroup Inc. and Ally Financial – the five banks taking part in the blockbuster settlement with federal agencies and state attorneys general.
The reports are based on interviews with bank employees, loan reviews and subpoenas.
Bank of America and Wells Fargo said they have fixed the problems identified in the reports.
“The memorandum references activities from over a year ago that have been addressed, as we do all we can to modify loans when possible and to ensure foreclosures are fair when they are unavoidable,” Bank of America said in a statement.
Wells Fargo said in a statement: “The matters raised in the report cover observations that are two to four years old and they have been addressed. Wells Fargo has made significant strides with implementing a number of changes in line with industry and regulatory servicing standards.”
20,000 documents a day
In interviews with HUD inspector general investigators, Bank of America employees confirmed that they routinely signed documents without checking their accuracy. Sometimes they only checked spelling, or checked to make sure they were listed as the signer.
One notary at the bank reported workload going from 60 to 200 documents per day to more than 20,000. Another employee described signing 18-inch stacks of documents at a time.
A manager’s notes revealed that benchmarks for signing documents were about 50 per hour.
Wells Fargo employees reported signing as many as 600 documents per day.
One was hired as vice president of loan documentation after working at a pizza restaurant and as a bank teller, and wasn’t given training, the reports state. Another hire had been a day care employee; another, a factory worker.
Managers pressed workers
Wells employees told upper-level management that they couldn’t handle the workload. Management, in turn, shortened the turnaround time for document signatures, forcing employees to sign more per day, the reports state.
A mid-level manager at Wells told HUD inspectors that she started a two-week study in her department to see how much time it would take if her employees fully reviewed documents before signing them. The documents piled up, and when her bosses got wind of it, they ordered her to stop, the reports state.
The findings follow more than a year of investigation.
Long-running investigation
In October 2010, a spate of reports emerged alleging that banks had been foreclosing on people using documents that mortgage servicers hadn’t fully read, a process known as “robosigning.”
Bank of America temporarily halted its foreclosures and reviewed its procedures. A few weeks later, the bank announced it had found no problems, but would resubmit more than 100,000 affidavits in foreclosure cases that hadn’t been completed.
HUD then began its investigation, part of the broader inquiry of the state attorneys general.
The department did not disclose its findings to Bank of America or Wells Fargo in advance. The report states that both banks hindered its investigation by being reluctant to make employees available for interviews.
Bank of America also did not fully comply with subpoenas, and when the bank did allow inspectors to interview employees, Bank of America had attorneys present who directed employees not to answer certain questions, the report states.
The majority of Bank of America’s loans in the review were originated by Countrywide Financial Corp., the beleaguered company Bank of America acquired in 2008.
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