Top executives from Bank of America Corp. and JPMorgan Chase & Co. are seeking to reassure lawmakers that exhausting alternatives to foreclosure for troubled borrowers is their top priority as they face ongoing questions about their servicing processes.
In written testimony to the Senate Banking Committee, which is scheduled to hold a hearing on the issue Wednesday afternoon, the bankers appear eager to tell panel members exactly what they want to hear.
"Our intent is to exhaust all modification, short sale and other disposition options before foreclosure," Barbara Desoer, the president of Bank of America Home Loans, said in written testimony.
David Lowman, chief executive for JPMorgan Chase Home Lending, echoed those remarks.
"I want to emphasize that Chase strongly prefers to work with borrowers to reach a solution that permits them to keep their homes rather than foreclose on their properties," Lowman said.
Both banks took some responsibility for recent cases in which borrowers felt mistreated, acknowledging that errors have been uncovered, but saying they have taken steps to correct them.
"JPMorgan Chase is committed to ensuring that all borrowers are treated fairly; that all appropriate measures short of foreclosure are considered; and that if foreclosure is necessary, the foreclosure process complies with all applicable laws and regulations," said Lowman. "We regret the errors that we have discovered in our processes, and we have worked to correct these processes so that we get them right. We take these issues very seriously."
B of A took a similar tack.
"We and those who work with us in connection with foreclosure proceedings also have an obligation to do our best to protect the integrity of those proceedings. When and where that has not happened, we accept responsibility for it, and we deeply regret it. We take seriously our obligation to the customer, the investor, the legal process, and the economy," Desoer said.
Both banks also said that in their reviews of paperwork practices, they had not found evidence that they had improperly foreclosed on borrowers.
"Thus far, we have confirmed the basis for our foreclosure decisions has been accurate," Desoer said.
Chase's Lowman said, "We have not found errors in our systems or processes that would have led foreclosure proceedings to be commenced when the borrower was not in default."
B of A said it is replacing the affidavits of more than 100,000 pending foreclosure cases that have not gone to judgment yet, ensuring that every affidavit will be individually reviewed by the signer, properly executed and promptly notarized.
Chase was even more direct in its self assessment of the situation saying, "our process was not what it should have been; quite simply it did not live up to our standards."
Chase said that it's immediate foreclosure moratorium when the problems came into focus last month went so far as to delay evictions.
It said that has added several additional checks to its systems since that time to ensure the affidavits are filed properly and that it is re-verifying foreclosure affidavits where judgments are still pending.
B of A, by contrast, spent less time focused on its mistakes, and more time touting its modification programs. The bank said that 86% of its borrowers are current on their loans, and said it is working to improve the quality of its due diligence and customer care.
Chase said it has put in place single point of contact case managers for the last six months. B of A said it was still implementing this process but had established such relationships for more than 140,000 customers.
Chase spent considerable time outlining its various loan modifications programs and ended on its commitment to follow the law and fix its affidavits.
"We have worked hard over the past month and a half to review and strengthen our procedures to remediate the affidavit issues we found," Lowman said. "We are committed to addressing these issues as thoroughly and quickly as possible."
Bank of America also put considerable emphasis on the context in which paperwork problems arose, explaining the bank's role as the nation's largest mortgage servicer, which happened almost overnight with its acquisition of Countrywide Financial.
It also emphasized the uniqueness of the financial crisis, in which the explosion of unemployment and other weak economic conditions has stressed servicers' resources dramatically.
"We have worked for two years since our acquisition of Countrywide to aggressively respond to more than a million customers in distress," Desoer said. "We don't claim perfection, but we believe we have led with innovative ideas and continue to put forward solutions that respond to customer needs. That's a responsibility that… every associate at Bank of America is working diligently to uphold."