“I believe the reports we just released will leave the reader asking one question: How could so many people have participated in this misconduct?” David Montoya, HUD inspector general, said in a statement. “The answer: simple greed.”
HUD investigators launched their inquiries soon after news of the banks’ practices caused a national uproar in late 2010, and government officials used their findings as they negotiated a recent landmark $25 billion settlement with the banks.
HUD reviewed foreclosure practices at all five banks involved in the recent settlement — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. They issued subpoenas, pored over personnel files, conducted interviews with scores of employees and examined the quality control measures — or lack thereof — at the banks’ mortgage servicing units.
Repeatedly, according to the report, investigators were hampered by poor record-keeping at the banks, sluggish responses to requests for documents and an unwillingness to make employees available for interviews or to allow them to answer detailed questions at the virtual foreclosure factories where they worked.
Nevertheless, investigators pieced together a picture of a deeply flawed system riddled with errors, where employees often had little or no training, where managers encouraged wrongdoing and where haste trumped all else.
At Bank of America, for instance, performance reviews revealed that employees often were judged based on how quickly they worked and how many files they churned through, the HUD report stated. One manager noted in an employee review: “Your stats so far this year are as follows: Affidavits 46.97 per hour (standard is 49 per hour), Assignments 54.74 per hour (standard is 51 per hour) and DocEx 49.67 per hour (standard is 46 per hour).”
At Chase, operations supervisors “routinely signed foreclosure documents, including affidavits, certifying that they had personal knowledge of the facts when they did not,” nor did those supervisors bother to verify the accuracy of the documents they signed, according to the report.
In addition, the supervisors said in interviews with HUD officials that they often signed affidavits as an “assistant secretary” or “vice president” of Chase, when those were not their official titles. Rather, they were given those titles by Chase for the sole purpose of allowing them to sign legal documents. The titles came with no other duties or authority, the report said.