I’ll begin this epistolary with one simple question…
Be honest….what comes to mind when someone mentions Bank of America?
What does that red, white and blue iconic logo conjure up in your mind when the payment coupon for your mortgage arrives in the mail or you pull out your debit card or VISA? You know the one: looks like an Andy Warhol depiction of the American flag unfurled over the rolling hills of the central plains.
Does the mere mention of this corporation’s name evoke more personal emotion in you than most? Negative emotions like rage, anger, frustration, even hatred? After all, Bank of America was voted the 19th most hated company by the American Customer Satisfaction Index in 2011; received very low scores in a recent Zogby/MSN customer satisfaction poll; was also rated the worst bank in the same poll (The Atlantic, January 5, 2011) and, of course, B of A made #9 on the Most Hated Corporations in America list according to a study conducted by Harris Interactive.
Maybe a charitable “why” is in order. Who are these guys and what went so wrong? A quick rundown of the usual suspects gives us a whole lot of corporations that aren’t exactly warm and fuzzy: GM, AIG, Chrysler, GMAC, AT& T, American Airlines, Goldman Sachs, Freddie and Fannie and most of these guys made the ugly list, too, so why is B of A generally everyone’s whipping boy?
We tolerate bad service, insolence and out and out patronizing rudeness from almost everybody else. How many times has your Big Mac or your Starbucks coffee come out wrong? What do we do? We eat it or drink it and move on only to return again the next day for another whack
And, how come when the “damned iPhone” (a term that should actually be trademarked it’s uttered so often) was loved and revered without reservation when it would barely facilitate a ten second call with a battery that was good for about 90 minutes? As I recall, when the Apple stuff first began hitting the market, there were some serious performance issues, but we all just pretended it was cool because Steve Jobs was cool, Apple was cool and the stuff looked way too cool to complain about such a little details as performance for crying out loud. My first iPhone and iPod were the equivalent of beautifully designed $300 paper weights (read very expensive office supplies). They were toys and they acted like toys…broke most of the time.
So what gives? We suffered through the early days of Apple with goofy forgiving smiles plastered on our faces, but when it comes to Bank of America, we just want to crucify the bastards….with rusty nails!
Bank of America used to represent the stuff our social and financial fabric was woven from. They made dreams come true. For millions and millions of Americans for decades they were and still are the stewards of our money; our daily-use checking accounts, even our life savings. They weren’t the enemy. They were our friends. Dream Weavers, so to speak! Home loans, boat loans, car loans, small business loans, big business loans, here a loan, there a loan, everywhere a loan loan. And that comically stylized red, white and blue flag was stamped on all of them.
But now we’re afraid to trust them. You can almost hear the whispers, “Can we still trust them? Do you think we should trust them?”. And I’m curious whether we will ever “choose” to trust them again. If you’re active in the business community as I am, you already know that most people flat out do not trust this company today. In all honesty, I’ve never worked with a company so adamantly and universally disliked by the general public as this one. It’s not all that unusual any longer for a client to tell me they absolutely will not apply for a loan with Bank of America even if it means getting no loan at all. In other words, they wouldn’t take money from B of A a second time even if it was given to them, which at today’s interest rates, if one qualified, almost equates to money “given to them”. That’s some serious dislike right there, folks.
And as far as trust goes, the first thing my clients do when they reach the end of the road involving a potential short sale or foreclosure involving Bank of America Home Loan is to ask if they should withdraw all of their money from their B of A accounts.
Bank of America customers who are in trouble seem to have a built in alarm that sounds when they think it’s time to throw in the towel. I see it every day in Las Vegas as they hit their own personal bottom and begin to batten down the hatches in preparation for trouble ahead. Had this same alarm tripped on the front end as they were acquiring these same assets they were about to lose, trouble may have been avoided altogether.
So where does the fault really lie? Are these opinions fair? Or are they founded in fact or simply emotion-based?
Most mortgage holders I have worked with are of the mindset (incorrectly, I might add) that if this is the end of the Bank of America Home Loans saga, then it is also the end of their relationship with Bank of America, period.
In my opinion, this isn’t a prudent strategy and worse, can prove to be an unnecessarily bad one. In fact, at almost any point in time that I have experienced financial challenges in my adult life, either personally or professionally, somehow Bank of America was involved and almost invariably they were also involved in stepping in to turn things around for me.
They are in essence a short term commercial loan bank with a very short memory and they most definitely want to lend you money! They must lend you money to stay in business and they would still be lending you money had the federal government not made it possible for them to survive and prosper without lending you money! Now that’s the true meaning of a conundrum or Finance 101 post 2008.
Strange as it may sound, it isn’t uncommon today for a mortgage holder to fear that if they miss their B of A mortgage payment, the “Monster” will simply pay themselves by appropriating funds from the consumer’s ancillary B of A checking account. Most people are grossly unaware of their rights and how lawful business works and there is surprisingly little understanding as to what is actually happening to them in both a direct sense or within the macro-economic big picture.
I would go so far as to say many troubled homeowners tend to make things worse on themselves when they begin trying to dig out of the hole the dug rather happily just a few years earlier. And even if given sound advice and all the “correct” answers, odds are they’ll turn right around and make the wrong decision about 50% of the time.
In hindsight, we seem to be a collective citizenry which has grossly mismanaged our financial lives maybe here in Las Vegas even more than in other parts of the country. Many of the people I routinely come in contact with have simply not saved nor developed a strategy for any sort of financial security beyond about 90 days much less formulated a retirement plan and this short fuse is what set off the early foreclosure wave which snowballed into devalued housing prices.
For many people, the financial meltdown of the housing industry presented a “perfect storm” opportunity to cry foul on Bank of America (or any other bank) and turn their own inability or unwillingness to pay the piper into a blame game. In reality, tens of thousands of mortgage holders had simply taken advantage of government-mandated home loans; an artificially bloated economy and extremely loose and plentiful credit. A perfect recipe for developing a lifestyle totally at odds with one’s net income. Simply speaking, we bought too much crap and spent like drunken sailors. Just one little problem; it wasn’t our money we were spending. We suffered from an addict mentality and our drug of choice was credit. First we complained when we couldn’t get enough credit, then blamed our enablers for giving us so much credit we overdosed on it.
The “blame game” tactic we see so often today reminds me of 9/11 which, let’s face it, noticeably affected Las Vegas for about three weeks which was the outside extent of the disruption at that time. What started as a “blip” of a business disruption, quickly turned into a rather odd and inexplicable phenomenon. It seemed that when one experienced any sort of finance-related problems at all, the 9/11 attacks were the culprit. Whether it be business, personal or worst of all the complete demise of their business, it was still the 9/11 attacks. Frankly unless you owned a business headquartered in or operating out of the World Trade Center or within the immediate proximity, you probably realized very little if any impact on your business. This is not to say I’m unaware of the travel and tourism impact, etc. but the collective psychological pattern around that time is similar to what we’re seeing now in the real estate industry.
Many people who lost their businesses (for whatever reason) around that time period attributed the terrorist attacks to the demise of their operations. The conversations would go something like this:
Query: “Dave what happened to your business?”
Response: “Oh, 9/11”
Query: “But you owned a pizza shop on the Las Vegas Strip?”
Response: “Yeah, totally killed my traffic. I just couldn’t recover.”
Now, I don’t claim to be a Donald Trump or our recently departed Apple Super-CEO, Steve Jobs, but I do know one thing and that’s if your business can’ t withstand three weeks of slow traffic, then you have a piss poor business model, my friend!
A pizza shop in New York City…..of course you’re going to have a rough go of it for a while. A branch office in one of the fly-over states with corporate headquarters in NYC, yup, I can make the correlation there, too, but here in Las Vegas, it was a bit of a stretch, wouldn’t you agree? I know it didn’t have that kind of impact in the Las Vegas market because I was right here. I was laying on the couch in the office of my empty start-up waiting for business to resume, which it did in about a week to ten days. Then it literally boomed! Truth be known I still pretty much attribute the 9/11 attacks for ultimately igniting the residential boom in Las Vegas because all of the massive production home building companies that had a presence in our market; NYSE companies like Pulte, DR Horton & KB had completely stopped pulling permits for almost 60 days. Then once the smoke cleared (no pun intended) they were never really able to catch up to the production demand for what was a burgeoning southwestern Boom-Town before during and after the attacks. But with this latest recession it is becoming a similar mentality. It is an excuse to fail. Everyone is busy looking for scapegoat instead of adjusting and getting back to work.
Now back to where B of A fits into the equation. Of course, the answer to the earlier question of whether or not to drain your B of A accounts as a protection tactic is a resounding “NO”. I remind clients who are considering this that B of A is just another large corporation with employees like you and me. It just happens to be a financial institution backed by and audited by the federal government. They are not internet thieves nor are they going to sweep your account like a computer hacker if for no other reason than it is highly illegal.
An interesting incident occurred once when I was representing Bank of America on a foreclosure sale and while I was on the phone with a Regional Vice-President going over an offer on their property, the pre-approval for the sale blipped up on my computer screen and I immediately boasted, “Well, not only do we have the home sold at an above- price offer, but a pre-approval just hit my email box from my local B of A loan officer!” Whereupon the regional V-P exclaimed, “What?! Don’t use B of A or we’ll never get it closed!”
So, what’s really going on here? Has the free world gone insane or instead of “Too Big to Fail” perhaps it should just be “Too Big”. Prior to the recent reports of huge impending layoffs, Bank of America would have employed almost 300,000 people according to my research thus, making it the largest bank holding company in the United States and the 2nd largest by market capitalization. It operates in all 50 states and 40 foreign countries and holds 12.2% of all U.S deposits. That’s a lot of damn money and that’s a lot of damn power! In other words, they ain’t goin’ nowhere so we all might as well get used to seeing that squiggly little red, white and blue flag icon.
Their Achilles heel may very well be that they are processing somewhere around 5 million residential and commercial loans that are currently in default. At maybe three human resources per defaulted loan to evaluate, process and dispose of each property, it would take roughly 15 million people or almost 3% of the entire “legal” U.S. population to ramp-up and barrel though that magnitude of workload. If that same workload were compressed into resolving all of the default issues by say Christmas of next year it would probably take double that amount of people, so in short, it can’t be done very quickly.
Compounding this is the uncertainty on national and world socio-economic and political fronts; turmoil within their own management; an ever-changing corporate culture; economic crises at large and variables like human error, bad deals and huge legal issues, i.e. Countrywide, Merrill-Lynch & Robo-Signing, I’m honestly thinking they really aren’t doing too bad. In fact, if you are truly able to comprehend what a colossal mess this crises has become, one might say they are actually performing quite well under the circumstances!
So, does that make you feel any better about losing your home or your new car or your business? Of course not. Don’t get me wrong, this is a clinical analysis. If I could have gotten my hands on any one of literally dozens of the minimum wage paper shuffling dimwits who repeatedly lost documents and spouted inaccurate, irrelevant and sometimes illegal information while I was making a sincere attempt to modify my own B of A loan from the comfort of my own severely depreciated custom home, I would probably be writing this from Clark County Detention awaiting trial. This entire boondoggle has gone on now for almost five years as an example of an operational business model gone berserk on a previously unimaginable level!
My observations are offered both from the standpoint of a victim and a vendor who actually works with B of A on a daily basis. I’m interested in this because they are not going away and because I believe it is a story that needs to be told. I’m not an insider, but I am a fairly unbiased outsource dealing routinely with not only Bank of America, but Bayview, Wells Fargo, Aurora, America’s Servicing Corporation (ASC), CitiGroup/Bank, JP Morgan, etc. We’ve done deals with them all.
So, don’t kill the messenger and don’t think I’m interviewing for a job with B of A either. I’m quite happy with my self-employed position in life running a small successful boutique real estate brokerage and critiquing other! I also offer the disclaimer (happily) that I am no longer a B of A stockholder.
Talk about Perception becoming Reality, not too long ago I was at the regional B of A headquarters for a meeting and couldn’t help but notice the armed guard posted right next to the reception desk. Hmmmmm. I think it was abundantly clear the Bank’s image, at least here in Las Vegas, might be in need of a little PR tender loving care.
Now, for those of us in the real estate industry, we don’t regard the name “Bank of America” as a whole any longer. Our long arduous days in the trenches of short sale processing and servicing Real Estate Owned (REO) properties are spent dealing with the limited derivatives of the Big Kahuna, not corporate. We might as well be dealing with a local franchise. We know our players as BOA, Home Loans or BAC, or the like with a regional or divisional city headquarters soon to follow as I.D. because any organization the size of this one does not move cohesively as one giant unit and this behemoth is no different.
Bank of America is broken into many different regions and divisions. And we simply refer to them as B of A, a little like Cher or Oprah. So in a sense Bank of America is the Oprah of banks. It’s a powerful “brand” that we are dealing with here no doubt and the brand is really what is in trouble. Less so, the individual parts of that branded whole.
Bank of America is so much a household name and such a part of our daily lives that it would not be unusual to tag them with an acronym nickname and assume everyone knew to whom we referred. I mean we all do that, right? Even outside the U.S. where I travel frequently Bank of America is widely recognized. Much so than say the average American would know Deutsche Bank or could even correctly pronounce Deutsche Bank. I’ve often wondered if it would be possible to re-brand Bank of America; maybe give it a new lease on life because that is usually the American way of doing thing. Maybe in five or ten years they could try out “Bank American” or “American Bank” and we could all just pretend none of this ever happened!
A public relations problem in America is generally handled through re-invention and a huge ad campaign; you just “redo yourself”. That’s typically what our athletes and politicians do, however, in this case the brand is so strong and the legalities and sheer expense of attempting such a PR effort move might be not only cost prohibitive, but psychologically untenable. In short, it would be ridiculously expensive to make Bank of America go away through any means and to their credit, that concept may not ever make it onto the agenda. For all we know, B of A’s corporate mindset might very well be that they have done nothing wrong at all and possibly, in retrospect, that may turn out to be the reality.
The focus of my interest in this topic is that I have found most of what we are forced to deal with involving Bank of America is not directly their fault. I am not saying their hands are entirely clean and they are innocent as the driven snow. But I am saying that much of the press regarding contradictions and apparent non-communication or incommunicative behavior may not always be what it seems. Sometimes the old accusation of “not really seeming to know what is going on” isn’t necessarily them. And that’s the truth.
Some of the bank notes originated through B of A are actually still held by B of A and are truly Bank of America Loans. Mine happens to be one of those, but the vast majority of these home loans are only serviced by B of A and held by investors all over the globe and at this juncture of the game, the “investors” are ultimately the ones calling the shots.
Once you really begin to systematically study the mortgage crises and begin to painstakingly unscramble the egg that is when it really gets interesting. As a business owner and consumer, I made a concerted effort about a year ago to become part of the solution instead of part of the problem and by doing so I’ve also made a lot of money along the way.
If you’re reading this hoping for full-on condemnation of Bank of America, this isn’t it; quite the contrary. I would tell you the same thing I tell my clients… like it or not Bank of America is not going away. They are here to stay. In fact, they are such a powerful entity that I dare say they are probably as safe a bet as the actual U.S. dollar. Now some of you will indeed doubt the future if our currency and debate its solvency, as well, but that is a subject for another time. We at Meridias Realty Group are on the winning edge of being associated with Bank of America after a long topsy-turvy relationship. My whole approach to our relationship has been, “if you can’t beat them, join them” and that is exactly what we have done.
Upon closer examination and being indoctrinated once more through a second and even third go around, things are going quite well for us. Not so much with B of A yet since in many ways they haven’t fared as well due to the reasons I’ve cited throughout this article mainly the disadvantages of sheer size and scope. They are still dealing with significant issues which time and strong, skilled management will eventually cure.
Furthermore, putting emotions aside, I have concluded it is entirely probable that they are as much victims in many ways as some of us have been and to a degree have been misrepresented in a multitude of similar ways. Believe it or not, I have the facts to back it up so stay tuned!
End of Part 1 – Bank of America – Red, White & Bruised
A part of the Vegas Intel blog by Michael G. Hutchings
published by Meridias Media & Bizwala and posted on
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