Bank of America (BAC) is being sued for denying loans to eligible homeowners, with the prosecution claiming the bank actually rewarded its workers for doing so.
All of this came to light when former Bank of America employees stated that they were offered monetary bonuses and gift cards to meet a quota of homes foreclosed.
“The lender improperly disqualified applicants to the Home Affordable Modification Program, or HAMP,” Simone Gordon, a former Bank of America loss-mitigation specialist, told Bloomberg.
All of this was done in an effort by Bank of America to force homeowners to take out private loans instead. These “in-house” loans have a higher rate of interest when compared to the government provided HAMP loans. At the same time, Bank of America was doing all it could to give of the appearance of following government procedures for HAMP loans.
“I got the [HAMP] denial in January, 2010 and then in June they came back with an in-house offer saying ‘Congratulations, you’ve been approved for a modification,'” Courtney Scott told CNBC. “But it only lowered my payments by about $7 and some cents.”