Mortgage Servicers Play Cruelest April Fool's Joke of All

Sunday was April Fools Day, traditionally a time for pranks, guaranteed to elicit a laugh or two at the expense of a gullible victim. It's usually good natured, unless you change the context. 

I'd nominate Housing and Urban Development Secretary Shaun Donovan for coming up with the cruelest April Fools joke of 2012: checks in the amount of $1500 to $2,000 to a tiny percentage of foreclosed homeowners. It's the chief executives of the five major mortgage-servicing banks doing the giggling.

With a straight face Donovan told Jon Stewart on The Daily Show that "we found that 60% of foreclosures were being done wrong," then added, "we went after the banks for it and we got $25 billion." With smug pride he made it appear – April Fools! – that somehow this was a be-all, end-all event, a landmark in moving beyond the foreclosure crisis, not mentioning that only a tiny fraction of those homeowners who are now financially underwater would benefit. 

While the alleged beneficiaries of the settlement are left wondering what's in it for them, the Merry Banksters have all made out like bandits since the onset of the financial crisis and continue to paint happy faces all over their balance sheets. Although the recently announced Department of Justice task force is supposedly charged with finding evidence of criminal and civil malfeasance in the way foreclosures were handled, it doesn't seem that any of the CEOs are quaking in their boots. In fact – April Fools! – Bank of America just announced that it quadrupled the salary of its CEO, Brian Moynihan.

So, while Moynihan revels in newly awarded compensation largesse, B of A's servicing pranksters continue to find additional victims for their not-so-funny jokes. One is Colorado homeowner Louise Davidson. On Wednesday, the sheriffs will pay a call to escort her and four cats out of the house she’s called home for 24 years. Together with millions of other homeowners, Louise has had the misfortune of being on the eviction end of Bank of America’s scheming; and for her, like the others, the future is dark, dim and uncertain.

Louise's tale follows a familiar trajectory: laid off in 2009 in the backwash of the financial crash; exhausted unemployment benefits, but continued to make partial mortgage payments; then found out that in the midst of discussing modifications with  Bank of America representatives that her home was sold at foreclosure to Fannie Mae, the mortgage holder. Despite this, she continued to try and work out a deal with the bank. She was told one thing by one representative ("we have no available programs"), then another by a different rep ("send us a hardship letter with more financials"). Fannie refused to get involved. But she has managed, through diligence, research and sheer will power to keep the sheriffs at bay while keeping a detailed log of all communications with banking representatives. While the buck continued to get passed from one B of A department to another all through 2010 and the first half of 2011, Louise continued to search for employment. Finally in mid-2011 she lucked out with a new job. Hoping this would give her a bit more modification leverage, she began a new round of calls and letters.

April Fools!

Moynihan and company refused to call off an eviction. In a last desperate move, she's now fired off a letter to the CEO, dated March 30, excoriating B of A for failing to provide any tangible assistance over the course of the last two years.

"How can you condone this conduct in your business, Mr. Moynihan? This is not ethical or fair in any sense of the word," she wrote. "Have you forgotten that there are hard-working people for every loan number you have? We are human beings, like you and your family, that deserve more consideration then to be ridden roughshod over by your business and dumped into the street with nowhere to go."

Louise has been supported in her efforts by Jorge Newbery, director of American Homeowner Preservation, a group dedicated to finding alternatives to foreclosure. They've got a petition out hoping to present it to the B of A and to Fannie Mae. Colorado Senator Michael Bennet has also been weighing in, trying to find some reasonable option. After all, she now has a job and is willing to make some sort of deal. 

Unfortunately, Louise's situation demonstrates the total insanity – and inanity – of how common sense has become a dispensable commodity when dealing with lumbering corporate bureaucracies. Think Tiananmen Square, and the image of a lone protestor facing off against the sheer weight and power of a 40-ton tank. Unfortunately, in the current crisis, the foreclosure tanks don't veer away at the last moment, and Louise may become the next victim. 

Wednesday, April 4, is D-Day, so to speak. I'm hoping Brian Moynihan does the honorable thing because, as the old saying goes, his desk is where the buck stops. Stay tuned.

Joel Sucher, a filmmaker with Pacific Street Films in Hastings-on-Hudson, N.Y., is working on "Foreclosure Diaries," a documentary about the financial crisis.