Cross-posted at Doom Network.
DailyFinance reported today that a former Balboa Insurance Group employee has leaked sensitive internal documents and e-mails that allegedly implicate the Bank of America subsidiary in force-placed insurance fraud. The information was released via the website BankofAmericaSuck, which is the handiwork of the ‘Anonymous’ hacker group.
The informant’s allegations taken from BankofAmericaSuck include:
Balboa Insurance/Countrywide [is] knowingly hiding foreclosure information from federal auditors during the federal takeovers of IndyMac Federal (a subsidiary of OneWest) and Aurora Loan Services (a subsidiary of Lehman Bros Holdings), falsifying loan documentation in order to proceed with foreclosures by fixing letter cycles in the system, reporting incorrect volumes to all of their lenders and to the federal auditors to avoid fines for falling behind on Loan Modifications, purposely and knowingly adjusting premiums for REO (Real Estate Owned) insurance for their corporate clients while denying forbearances for individual borrowers, etc., etc., etc.
Since servicers lose money on poorly performing loans, there is a great deal of financial benefit in using force-placed insurance to compensate and help fill the coffers. For example, the force-placed insurance department at Assurant, the market leader, accounted for $811 million of the company’s $879 million in total profits during a 2-year period. Balboa, now owned by Bank of America, was the #2 market leader (right behind Assurant).
Reuters blogger Felix Salmon wrote an article back in November 2010 in which he recounts a story of what happened to one homeowner:
Consider one case found by Horwitz. A homeowner had a $4,000 insurance policy, which was paid by the loan servicer, Everbank, from an escrow account. But Everbank allegedly let that insurance policy lapse, allowing it to replace the policy with a different policy, this one costing more than $33,000. The insurer, a subsidiary of Assurant, then paid Everbank a $7,100 kickback for giving it such a lucrative policy — and, writes Horwitz, “left the door open to further compensation” down the road.
$7,100 is an insanely enormous amount of money for a loan servicer to make on a single property: the average loan servicer makes just $51 per loan per year. And of course it’s not the servicer paying that $33,000 insurance premium — that money is ultimately paid by the investors who bought the loan. Those investors are, understandably, not happy.
Since this type of scam has already been seen with Assurant, it’s not very surprising at all that Balboa Insurance Group was also doing similar. Unfortunately, this recent leak comes at a time where many Americans are beginning to doubt the banking institutions on a whole. A youtube video found on the BankofAmericaSuck website reflects just how scary things really are: