State prosecutors from all 50 states are investigating the country's largest banks, to learn whether they have been foreclosing on thousands of Americans improperly.
The banks say they do not seize people's houses without justification. But NPR has uncovered a case that might suggest otherwise. In fact, the homeowner in this case was actually the victim of a scam run by one of the bank's very own employees. But despite that, the bank moved to foreclose anyway.
Six Years Of Stress
The banks say they've been doing all they can to work with homeowners to avoid foreclosures. But don't tell that to Rachel Keyser from Deerfield, N.H.
"I can't tell you the emptiness," she says about dealing with the threat of foreclosure. "I mean, my knees started to shake, my stomach got into a knot."
Keyser's been on the verge of losing her home for years now. And she says the reason is that one of Countrywide's own employees ran a scam on her, and stole a lot of money.
It all started way back in 2004, before Bank of America bought Countrywide.
Just a few months after she bought her house, Keyser says, a loan officer at the local Countrywide office called her and pushed her to refinance.
"He didn't ask for me to come to the office or anything like that," she recalls. "We had a couple of phone calls, and he came to the house. So this guy walked in with another very nervous-looking fellow who was supposedly a real estate person."
Keyser is a single mom and an art teacher. She'd already been a homeowner. And she put down a $100,000 down payment when she bought the house.
But she readily admits that she's not very sophisticated with legal paperwork, and was probably too gullible.
She says the Countrywide agent got her to sign a bunch of papers. It turns out that he was running what's called an equity-stripping scheme, where he got her to borrow more money -- and he put it in his own pocket.
Asked how much money he took from her, Keyser says, "$165,000 -- the entire equity of the house."
Loan Scam Sparks An Inquiry
Keyser's story is backed up by documents from a state of New Hampshire Banking Commission investigation. She called the authorities, and the state eventually barred these con artists from doing business in New Hampshire. NPR spoke with three other homeowners who fell victim to the same scam.
In Keyser's case, her mortgage payments went to a bogus shell company -- Countrywide never got the money. So she wound up way behind on her house's mortgage.
Keyser says she's been trying to explain all this for years now -- first to Countrywide, and then Bank of America after Countrywide collapsed and Bank of America bought it.
But when she tries to explain that she was the victim of fraud, she says, "They don't want to hear it. They don't believe me. They don't want to hear it."
So Keyser and her daughter have been living in limbo, not knowing if they're about to be put out of their house. Her daughter, Sydney, says they dealt with debt collectors the entire time she was in high school.
"That's how it's been for years," Sydney says, "just constant stress, and then, you know, you try not to talk about it. And then eventually, some phone call comes up, and it's just like -- OK, time to cry now ... time to get angry. That's just been life."
Rachel Keyser says her life savings is tied up in the house.
Instead Of Help -- More Confusion
You would think that since the bank's own employee ran this scam, Keyser might be at the front of the line for people deserving to get some help avoiding foreclosure. But she hasn't been able to get that help.
This summer, Bank of America finally moved to foreclose and seize her home. That was in July.
"It literally was like a black hole opened up from under my feet," Keyser says, "and if I were the kind of woman that would crumble ... I would have crumbled."
Instead, she decided to fight the bank, with the help of a local attorney.
The lawyer, B.J. Branch, says he literally ran to the courthouse the day before the house was to be auctioned off and persuaded a judge to grant an emergency injunction.
"If I hadn't, her house would have been sold," Branch says, "and undoing a foreclosure, once it's occurred, is a nightmare even worse than trying to get it stopped."
Bank of America says it is now working on a loan modification for Rachel Keyser to keep her in her home.
Narrowly Avoiding A Foreclosure
NPR actually first contacted Bank of America about Keyser's case more than eight months ago. And bank representatives said then that they would look into it.
Keyser signed an agreement with the bank that temporarily lowered her payments while she tried to work out a permanent fix.
But it was in the middle of that period -- when Keyser was making those payments, and when the bank had pledged in writing not to take her house -- that Bank of America moved to foreclose on her anyway.
"It was very crazy," Branch says. "The bottom line is that no one -- no one -- could answer any questions here."
Branch pulls out his file on the case, including checks that prove Keyser was making the payments as agreed. He's even saved phone messages from the bank telling him the house was not going to be foreclosed on.
In one recording, an official from the bank says, "Hi Mr. Branch ... I'm just calling to let you know that the foreclosure has been postponed. There is no new foreclosure sale date set."
Listening to the message, Branch says, "That was not an accurate statement."
After all, Branch says, he has documents showing that a new foreclosure date had been set. And the bank then moved ahead to foreclose.
"I mean, this is pretty impressive -- in terms of the incompetence," he says.
For its part, Bank of America says that it is investigating what happened in Keyser's case. The bank also says that during the foreclosure crisis, it has hired more staff and has thousands of employees now working with homeowners to help them try to avoid foreclosure.
And the bank stresses that it is working with Rachel Keyser to modify her loan so she can keep her house.
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