Marcy Koltun-Crilley spends a lot of time reading up on foreclosure court cases. It’s what you have to do when you’re suing one of the largest banks in the world.
She was deep into a 59-page complaint filed in New York in 2011 against Bank of America–the same bank she and her husband Lawrence are going after–when I caught up with her at her Kihei home. “This is exactly what we dealt with,” she said in exasperation, the PDF of the complaint glowing on the computer screen behind her as we spoke.
Since January of this year, Marcy Crilley and her husband Lawrence (a Maui County firefighter currently on medical disability) have been suing Bank of America–specifically, both the Charlotte, North Carolina-based bank and BAC Home Loans Servicing, its subsidiary mortgage lender run out of Calabasas, California. Their complaint alleges that the bank and lender were “negligent” and engaged in “unfair and deceptive practices.” The case began in Hawaii’s Second Circuit Court, but it’s in federal court in Honolulu now (Patricia McHenry, the Honolulu attorney representing Bank of America in the case, did not respond to a phone call asking for comment).
Litigation is a tough strategy–something Crilley knows very well.
“We’re taking a big risk,” she told me. “The attorney fees are high and we could lose everything. But it’s so frustrating and unfair. I can’t believe a jury would not see this as total fraud. But also, I keep thinking that this is Bank of America. This is HAMP [Home Affordable Modification Program]. This is the federal government. They can’t totally screw me. But they also keep telling me things are coming. You’re supposed to trust them. Who else can I believe?”
So far, says her Wailuku attorney James Fosbinder, US District Judge Leslie Kobayashi’s April 26 decision to deny Bank of America’s attempt to dismiss the complaint outright is something of an historic victory in itself. Though Fosbinder says he has many clients with problems similar to the Crilley’s, Kobayashi’s apparent willingness to bring the case to trial is rather rare.
Like many homeowners these days, the Crilley’s found themselves in a terrifying spot. With her income dropping, they began burning through their savings as they paid the mortgage on their South Kihei home, which they bought in 2003 for $520,000. Like many homes in the quiet neighborhood that surrounds the Wailea fire station, the house is big, but not grand.
But in the last days of 2009, they received a letter from BAC Servicing asking if they’d like to get a loan modification from the federal government’s new HAMP. Marcy Crilley said they leaped at the chance, and immediately filled out an online application form.
“They’re just making it so the monthly payments are lower, but you have to make the payments longer,” she said.
As is well known, this country went through something loosely called a “housing collapse” around 2008. Years of people using exotic mortgages and interest-only payments to buy overpriced homes–combined with brokerage houses approving ever greater numbers of risky loans–finally imploded near the end of President George W. Bush’s term, dragging the global economy down with it.
HAMP was part of the federal government’s response–a well-intentioned attempt to stop the endless foreclosures that plagued the nation’s housing market. According to the Crilley’s complaint, HAMP lowered homeowners’ monthly payments to 31 percent of their verified monthly gross (pre-tax) income. But despite such promise, the Crilley’s complaint says HAMP “has largely been a failure, due, in many ways, to service abuses.”
The program was and remains controversial, though not generally for the reasons cited in the Crilley’s complaint. A federal program designed to help people who can’t make mortgage payments they freely signed up for–while millions of other homeowners succeed in making the monthly payments without government assistance–would be controversial even without the Crilley’s allegations.
But according to a General Accounting Office report cited in the complaint, HAMP simply doesn’t work. Since its start in November 2010, there have been 1.4 million trial loan modifications. Of those, just 550,000 homeowners have actually seen permanent changes to their mortgages, with another 729,000 trials cancelled.
The reason for so many cancellations, the Crilley’s complaint alleges, is that lenders were never serious about modifying mortgage terms in the first place. Instead, the companies employed legions of “agents” whose sole duty was to lead worried but hopeful homeowners through endless bureaucratic mazes of paperwork and phone tag.
“Central to the failure of HAMP and other loan modification programs are arbitrary and negligent roadblocks erected by servicers to prevent modifications from proceeding to a permanent status,” states the complaint. “[B]orrowers, including Plaintiffs, are often asked to resubmit the same documents numerous times, clearing demonstrating the systemic negligence of servicers’, including BAC Servicing’s recordkeeping.”
The Crilley’s complaint, which reads like a novel, calls this system a “deny and delay model:” erect “endless barriers” and force mortgagors “to resubmit the same paperwork repeatedly.” On repeated occasions, the Crilleys allege, BAC Servicing agents advised them to stop making mortgage payments altogether so they would “move to the top of the pile” of homeowners seeking loan modifications. In the middle of it, Lawrence Crilley suffered serious health problems, putting him on disability and further intensifying the need for new loan terms.
“The objective of these tactics is simply to maximize profit,” states the complaint. “During delay, fees and interests accrue.”
And so, according to the Crilleys, that online form they filled out at the end of 2009 led to two years of phone calls with an endless list of BAC Servicing agents (few of which ever gave a last name) and mindlessly filling out the same application forms over and over. There was also months spent waiting for paperwork to arrive, only to give up and call again and find out again that said paperwork was never sent in the first place.
Page 16 of the Crilley’s complaint contains a paragraph that exemplifies the cartoonish run-around the bank allegedly put the couple through:
“On August 13, 2010, Plaintiffs received an invoice from BAC Service [Bank of America Home Loans Servicing] notifying Plaintiffs that they were seriously delinquent and that, if they did not hear from Plaintiffs, they would have to initiate foreclosure. Plaintiffs called the number provided on the invoice and spoke with ‘Lisa.’ Lisa told Plaintiffs that they were under review for a loan modification so [she] did not understand why Plaintiffs were calling. Lisa transferred Plaintiffs to ‘Remona.’”
Written notices of impending foreclosure lead to frantic phone calls and endless transfers to people who lack last names. It’s easy to imagine boiler rooms across the globe, staffed with dozens, if not hundreds, of “loan modification agents” named “Lisa” and “Alan” and “Shirley” sitting at cramped desks and wearing telephone headsets. None have dedicated phone extensions. The work is as cheap and meaningless as the information they give to the frightened homeowners who call them.
Still, the Crilley’s said they jumped through every hoop each new loan modification agent put before them. And as the loan agents allegedly told them, the Crilleys stopped making regular mortgage payments in favor of much smaller “trial payments.” Regular payments, they were allegedly told, could “disqualify” them from HAMP approval.
“It was hard for me to be late on a payment,” Marcy Crilley told me. “I never do that.”
At one point, a new rule went into effect ostensibly requiring banks to assign a single “point of contact” to customers seeking loan modifications. The result, according to the Crilley’s complaint, was more black comedy:
“On September 22, 2011, Plaintiffs received a letter, dated September 14, 2011, from ‘Orlando Pimentel’, who had purportedly been assigned to Plaintiffs by BANA [Bank of America], as their ‘dedicated customer relationship manager,’” states the complaint. “On October 5, 2011, Plaintiffs received a letter, dated September 30, 2011, from ‘Bina Abraham’, claiming to be Plaintiffs’ ‘new customer relationship manager’. On October 11, 2011, Plaintiffs received another letter, also dated September 30, 2011, from ‘Satina Halsey’, claiming to be Plaintiff’s ‘new customer relationship manager.’”
From Sept. 22, 2011 to Nov. 28, 2011, the Crilleys received seven letters from various “new customer relationship managers.” Marcey Crilley said she never spoke to any of them. The letters all contained the same “boilerplate” language “that was automatically generated and sent to Plaintiffs with no genuine oversight or attempt to meaningfully engage with Plaintiffs,” states the complaint.
“It’s just the cost of doing business to them,” Crilley said later.
That this went on for two years would drive anyone crazy. But Marcy Crilley kept boxes of notes, and meticulously logged every call, every request for this or that form. “I saw early on the need to keep notes,” Crilley said.
And now, barring any settlement or new attempt by Bank of America to get the case tossed out of court, the case comes up for trial on Feb. 12, 2013.
But it’s unknown how long she and her family will still live in their Kihei house. “I’ve not been paying them,” she said when I asked about mortgage payments. “I still get bills. But they have not tried to foreclose on me yet.”
Before I sat down with Crilley I had read her complaint, so I knew they were asking for unspecified damages and attorney fees. But I still asked Crilley what she would like the lawsuit to bring about.
“What would I like?” Crilley asked back. “I’d like to be made whole. My credit report is damaged. With our score, how could I ever buy another house?”
Still, if they have their way, the Crilley’s would rather stay where they are.
“We love this place,” she said. “It needs work, but we haven’t done that because we’re worried about putting anything into it because they’ll just take it.”