Bank of America's Attitude Problem Will Be Its Downfall

As Bank of America (NYSE: BAC  ) struggles to recover from the financial crisis, CEO Brian Moynihan has made it clear that the big bank plans to get back into the mortgage game. To that end, the bank has taken concrete steps, including hiring hundreds of new mortgage bankers to staff its shiny new branch locations.

But, B of A still has a huge problem regarding the mortgage business: Its reputation in that arena is just terrible. People really seem to hate the big bank, and lawsuits like the one accusing Bank of America of rewarding employees who treated loan customers with scorn and condescension has only tarnished its image even further.

The worst part about this situation is that Bank of America seems dead-set against improving its poor performance in the mortgage servicing department. The latest evidence of its disdain for how others view its mortgage business capabilities comes in the form of Fannie Mae's (NASDAQOTCBB: FNMA  ) Servicer Total Achievement and Rewards ratings, which recognizes mortgage servicers that exhibit performance superior to their peers.

Fannie's servicer rating system
Fannie Mae unveiled the STAR program in February 2011 in an effort to "promote transparency, accountability and excellence in mortgage servicing," and to recognize those that were of the most service to customers. Since then, the agency has published the results of its reviews, which is weighted heavily in the area of customer service through the Servicer Performance Scorecard.

Loan servicers are rated according to three benchmarks: the number of loans 90-plus days delinquent that are successfully returned to non-delinquent status, how well servicers help troubled borrowers avoid foreclosure, and how efficiently servicers make alternatives to foreclosure available. The latter can include short sales, as well as other methods of resolving mortgage debt.

Bank of America flunks another test
The servicers are broken up into three peer groups, according to the number of Fannie Mae loans under their jurisdiction. Peer Group One includes the largest servicers, and the winners in that category, according to Fannie's results released on August 27, are big banks Wells Fargo (NYSE: WFC  ) and PNC Financial (NYSE: PNC  ) , as well as mortgage servicers Nationstar Mortgage (NYSE: NSM  ) and Ocwen Financial (NYSE: OCN  ) . Notably absent? Bank of America, of course.

This isn't the first time B of A hasn't made the grade on Fannie's scorecard. There have been a total of five STAR Scorecards released which feature Peer Group One results, and Bank of America doesn't appear on any of them. Wells, by comparison, makes an appearance on each, and JPMorgan Chase (NYSE: JPM  ) and Citigroup's (NYSE: C  ) Citi Mortgage have shown up sporadically, though neither made the cut for the 2012 year-end results.

An "F" for effort
Obviously, improving its loan servicing and customer service performance isn't a priority for Bank of America, and that truly is a shame. The bank has been around long enough to know that customer service is a huge component of the mortgage business; even newcomer Nationstar -- which has purchased boatloads of B of A's mortgage servicing rights over the past year or so -- has that part down, it seems. As for Wells Fargo, well, stellar service is apparently part of the reason it commands one-third of the mortgage market. Why can't Bank of America watch, and learn?

Mortgage activity may be down at the moment, but that won't last forever. When competition for mortgage customers heats up, I fear B of A will be left out in the cold. And for that, the big bank must shoulder all of the blame.

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Read/Post Comments (21) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 01, 2013, at 10:39 AM, sabebrush6 wrote:

    If your mortgage arranger recommends B of A - just say no ! Go to a credit union.

  • Report this Comment On September 01, 2013, at 10:48 AM, ZiggyWithIt wrote:

    I was a BoA mortgage customer. I was never late with a payment, and have an excellent (over 800) credit score. When I called to look into a refinance to lower the rate, they made me call 3 different departments, with long automated telephone trees each time. I was finally told that BoA could only consider adjusting the rate if I was in default. Otherwise it was a total refinance from scratch. I said no thanks and refinanced with a credit union that greets me at the door and had great rates.

  • Report this Comment On September 01, 2013, at 10:54 AM, Kylie42 wrote:

    I was a Bank of America customer for years with checking and savings accounts. After horrible customer service on repeated visits and a total lack of care about me as a customer I went to Wells Fargo and have been happy there ever since. I wouldn't recommend BoA to anyone.

  • Report this Comment On September 01, 2013, at 11:09 AM, mariner88 wrote:

    My home was destroyed by Hurricane Ike Sept 14 2008. BOA had procured the mortgage from CountryWide. When I went to a BOA Mortgage office to find out where I could service my mortgage the BOA manager told me: "BOA has no mortgage offices where you can service your loan".

    BOA had put a forced place HomeOwners Insurance policy on a home that no longer existed. When I did not pay they tried to foreclose on me (I am still making payments). I put a restraining order against BOA & the foreclosure. BOA never foreclosed on me.

    BOA then cut the lock to my gate and took all of my salavaged personal effects from my property.

    Bank of America is "ruthless in their incompetency".

  • Report this Comment On September 01, 2013, at 11:21 AM, Lundr wrote:

    B of A was 'sold' our VA loan years ago - boy were we unhappy. When the interest rates dropped we decided to do a IRRL (an Interest Rate Reduction Loan) that is supposed to be 100% guaranteed to VA loan holders in good standing regardless of if your property lost value.

    We went to both BofA and a private lender to get quotes. BofA beat the quote and urged us to process with them. A month later they had yet to send the final documents - everything else was done...

    Turns out they were not offering IRRLs for the state of AZ BUT were happy to go through the motions in an effort to delay or sabotage your leaving them... One even gloated on the phone about it ('well you can always TRY to reapply to the other lender') For those unaware IRRLs outside the Bank holding the mortgage when the property is upside down are difficult to obtain.

    It is another way for BofA to rip off service members and former service members to play this game in the hopes of keeping the interest rates higher than anyone else can get. It is a predatory practice targeting a population that has to keep a perfect pay record or endanger their security clearance. Once again BofA savages soldiers and vets...

    We did find a third party willing to offer an IRRL, we refinanced but it took another month and it only happened because I was able to search high and low for days.

    Soldiers and Sailors are warned by their fellows about dealing with BofA because they have a reputation in the service. They were one of the Banks caught foreclosing on deployed military members homes in violation of US law - and of course also refusing to reduce deployed members interest rates - also a violation.

    They are not 'poor' in customer service, they are willfully criminal.

  • Report this Comment On September 01, 2013, at 11:41 AM, britches5 wrote:

    B Of A sucks. My son paid for 14 years on his house never late nor missed a payment. He requested them to see a copy his title to see who owned his house as it had been bought by other banks to finally end up with B Of A whom they said did not own it but only collected the mortgage for them.

    My son sued and lost and they tacked on a $23,000 lawyer bill.

    He still doesn't know and the judge that heard the case said they would be in court forever with every bank if they did this. The banks and judges are in cahoots with one another .

    So who owns your Home?

  • Report this Comment On September 01, 2013, at 12:01 PM, milstandard185 wrote:

    Bank of America, is NOT the only super-huge, global corporation with an attitude problem. There are several of them, home based in the United States. While it would be quite difficult to name them all in this short, small block, there are some whose management style, constant restructuring, constant outsourcing, off shoring, terminations, firings, etc. have begun to attract global attention. One huge company that I can think of, has an upper management style that is steeped in old ways and in the work style of the 1950's. Where men rule the upper stratospheres of the corporation and anyone lower than they are, is considered fully expendable. Where long term, loyal employees are considered a "liability". But, by the same style, Upper Management and the corporate officers consider themselves to be thought provoking leaders, honest, ethical, and irreplaceable. How can Upper management and Upper leadership be considered absolutely irreplaceable, when every Salary employee, Contractor, Hourly worker and Retiree in this corporation from the United States, is considered expendable, at any time profits take a turn down?

  • Report this Comment On September 01, 2013, at 12:21 PM, flomerch1 wrote:

    My problem with this bank is not a mortgage problem but does show that the Heart of the bank is evil. They issued me a bank credit card for my business witha 12000.00 limit. I called to verify it and then went to market and used most of the credit limit buying for my retails tore. The next month I got a letter cancelling the card because I was not credit worthy....Predatory lending. I have paid the card off, of course, but I will never use that bank again,....and will always tell anyone thinking of using them about my experience.They only care about profits at any cost and have no soul!

  • Report this Comment On September 01, 2013, at 12:25 PM, SkepikI wrote:

    This sort of behavior has been going on with BOA for decades, only in the last 5 years have they made even a modest effort to correct it, and are failing miserably. This gets them the nomination for the Bank Darwin award with me. If you own or are thinking of owning BAC beware. If they don't treat their CUSTOMERS with honesty and respect, just imagine what they will do to their shareholders. Oh, wait, you dont have to imagine, just look at the history of the past 15 years.....

  • Report this Comment On September 01, 2013, at 12:40 PM, Phineass wrote:

    As bad as they are, and they are really bad, but wells fargo I cannot imagine is any better.

  • Report this Comment On September 01, 2013, at 2:50 PM, DiesMali wrote:

    A good friend of mine is a banker for a small local bank, and he absolutely hates dealing with BoA for any reason. They are almost impossible to work with whether you're a customer or a coworker in the banking industry. If other BANKERS hate dealing with them, that's a pretty good sign that BoA is full of incompetents and losers.

  • Report this Comment On September 01, 2013, at 3:09 PM, Wasatcher wrote:

    Bank of America repeatedly refused to help me keep my home . . . at first they told me they were only assisting those who were behind in mortgage payments and I wasn't, so they weren't willing to help me. I was self-employed for 25 years, but the economy slowed my business to an absolute crawl and eventually made it impossible for me to make the payments and, after I was late on them, the bank still refused to help me. I had no choice but to put my house on the market and BofA had no problem accepting a short sale for cash in an amount that didn't even cover the cost of building my home, much less the land and extensive improvements that we paid cash for, including 9 years of mortgage payments and equity brought from ownership of 2 previous homes. The rich guy's offer was even $50,000 less than the most recent appraisal. If BofA could withstand that loss, why didn't they give ME the same thing they gave the rich guy who now lives in my house part-time? I was highly invested in my home, unlike the guy who's now sitting on MY equity, and would never have dreamed that the United States of America would allow a bank to steal my life's work, but they did and even rewarded them with bailout money. I filed a complaint with the CFPB, who then handed it over to BofA for resolution. Guess I don't need to tell you what THEY decided! Case closed, BofA got away with stealing my life's work.

  • Report this Comment On September 01, 2013, at 3:25 PM, JINNMINER wrote:

    Bank of America stole money from poor, foreclosed on poor people and gave it away to veterans to show good gesture. BofA is fooling the investors and the public. Congress is supporting this bank, we should further investigate the involvement of politicians with BofA. Warren Buffet is also a huge supporter of BofA.

    Take from poor give it to the riches-BofA MOTO

  • Report this Comment On September 01, 2013, at 3:26 PM, JINNMINER wrote:

    PNC is another bank in trouble. Watch out !

  • Report this Comment On September 01, 2013, at 7:54 PM, Cleo1973 wrote:

    Not only have they screwed me until I refinanced with a credit union, but they sold an old credit card that was PAID OFF to some other crazy company who is trying to collect over twice what I owed. Is that even legal? I know my credit will take a hit, but I am not going to respond. It was over 10 years ago.

  • Report this Comment On September 01, 2013, at 7:59 PM, Cleo1973 wrote:

    Also, I agree that Wells Fargo is the pitts. They have ruined credit and been soooooo screwed by their mortgage department. I think BoA are the number one thieves and WF is a very close second.

  • Report this Comment On September 01, 2013, at 9:55 PM, alabamldy wrote:

    And this is NEW news about Bank of American? They have always acted that that! If a someone came out of a deseret asking for water, they would give him or her a glass of sand!

    They cheat and caused active duty servicemen and servicewomen in a war zone into losing their homes. If there is not one, there should be a class action suite against them for that alone. I would trust a rattlesnake before I would trust Bank of American.

  • Report this Comment On September 01, 2013, at 10:25 PM, Rusty56 wrote:

    I've had nothing but good luck with BAC. WTF is wrong with you people. Pay your bills and you wont have these problems! And why do you read anything written by the fools. They are all just kids!

  • Report this Comment On September 01, 2013, at 10:40 PM, davidniurka wrote:

    After 20 years as a loyal customer, BofA lowered my credit card limit from $40,000 to just $500 because I was in the process of modifying my mortgage. They would never talk to me on the phone to assist with anything. I hope this bank just disappears from the face of the banking world. They are repulsive. My friend Robert quit working for them when he saw how much he was paid and read how much they paid their CEO with his obscene bonus. He went back to school and is now a helicopter pilot. Nice way of telling the bank how worthless they are.

  • Report this Comment On September 02, 2013, at 11:14 AM, Rusty56 wrote:

    David - You DID NOT have a $40,000 Credit Card limit - baloney! Shows the credibility of the posters.

  • Report this Comment On September 04, 2013, at 12:06 PM, rcwhalen wrote:

    I would be careful making broad assertions about any bank based upon the STAR ratings from FHFA. There is a great deal of politics and internal business conflicts in the business relationships between the large zombie banks and the equally dysfunctional GSEs.

    Chris

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