Richard Borge
My friend Mike got evicted by a debt collector on a raw morning in February 2017. Deputies from the Philadelphia Sheriff’s Office knocked on his door, and movers rolled up in a big, yellow truck. Soon they were dragging out Mike’s bare mattress as the deputies drank coffee around the white gabled stoop.
Wishing that I could do something, I fell into my role as a reporter and got out my pad and pen. “Who’s the bank?” I asked Mike. “Who’s got the mortgage?”
“Write this down,” Mike said, “Bayview Loan.”
He pointed to a black sedan parked up the hill. “That’s their lawyer,” he said.
“Who are they?” I asked. “Do they own the place?”
Mike couldn’t tell me much more. His baby girl was crying, and his partner, who was pregnant with their second child, was pacing the sidewalk with the phone to her ear, trying to find a place to stay.
At the time, I was writing about insurance for a legal news service, where I saw the same scenario repeat: Something bad happens, say a work injury, or a car accident. Maybe someone dies. Either way, nobody wants to pay, least of all the insurance company. I opened a database I used for this job, WestlawNext, and searched “Bayview Loan.”
If it could have, my computer would have burst at the seams. The search result brought back 5,626 court documents, 2,290 complaints, and 1,317 court cases. Bayview, it turns out, is a mortgage servicer, an outfit that collects mortgage payments, with a record of abuse. They sue and get sued a lot.
But once I’d gotten past the court cases, what I found revealed more than phony charges and families pushed into the street. I found an entity composed of myriad companies, almost literally uncountable, nearly all run from a single office in Coral Gables, Florida, and its role in a larger Wall Street betting scheme that transforms neighborhoods into rental markets.
What it shows is that the housing meltdown of the Great Recession, and the predatory practices that led to it, continues still, at least for some homeowners. The period between 2008 and 2012 saw nearly four million home foreclosures, dispossessing up to ten million people. Neighborhoods sank in value, and with that loss went local tax revenues and community investment. In personal terms, foreclosures stoked shame, anxiety, even suicide, according to one study from the National Institutes of Health. The federal government tried to stanch the flow, spending $245 billion to stabilize banks and relieve them of the bad assets largely credited with the fall.
Neighborhoods sank in value, and with that loss went local tax revenues and community investment. In personal terms, foreclosures stoked shame, anxiety, even suicide.
But the bleeding has not stopped, due in part to companies like Bayview Loan, which effectively transfer wealth from low- and middle-income Americans to the international investment class, aided by the federal government. The biggest culprits are the Department of Housing and Urban Development and the Treasury Department, agencies charged with protecting communities and promoting growth.
But first, the court cases.
From among the 1,317 cases, I found 102 that reached the judgment phase, meaning that the courts took the facts as settled. A pattern emerged. In hundreds of pages of these documents, homeowners across the country reported the same experience. Bayview, they say, overwhelms, confuses, and intimidates homeowners into foreclosure, tacking on every last charge they can.
Take the case of the Jacobsons.
In December 2008, according to the findings in a state supreme court decision, Robin and Kathleen Jacobson of Elbow Creek, Montana, missed “at least one” mortgage payment on their home in the southern part of the state. Robin built houses, and had taken a hit in the 2008 crisis. Their bank, CitiMortgage, contracted Bayview to take over collection, and within three weeks, Bayview delivered a letter threatening a suit for the whole mortgage if all past due amounts were not paid by a certain date. The letter, however, provided no date. Nonetheless, the Jacobsons paid. Bayview refused the payment.
The Jacobsons made another payment. Bayview called and told them to stop, saying that if the couple fell into arrears they could qualify for a “modification” program through the Treasury Department. While the Jacobsons waited for Bayview to initiate the application, Bayview sent a demand letter identical to the first one, again without a date, and initiated foreclosure.
But then, the Jacobsons got the ear of U.S. Senator Jon Tester of Montana. In a conference call with Tester and the Jacobsons, Bayview promised to waive the late and legal fees, drop the interest rate, and cease destruction of the Jacobsons’ credit. The Jacobsons agreed, but Bayview refused to put the offer in writing. Instead, it executed foreclosure and put the house up for sale. This all happened in less than a year.
The Jacobsons sued and, according to the Montana Supreme Court’s 2016 decision, Bayview was determined to have faked notarization of documents, claimed powers it didn’t have, and filed papers under companies invented on the spot. As litigation dragged on, Bayview added its legal fees and costs to the balance that the Jacobsons owed. But the court, in the end, ruled in the Jacobsons’ favor.
But while this outcome is unusual, the Jacobsons’ bad experience with Bayview is not. Similar stories emerge in other court cases, including ones involving homeowners in Crossville, Illinois, San Pablo, California, Alabama’s gulf coast, Chicago, Illinois, and Naples, Florida.
Enter the name “Bayview Loan” in the U.S. Consumer Financial Protection Bureau’s searchable database of complaints, and you’ll see the company presently averages two complaints a day for a seven-year total of nearly 2,500 gripes. The chorus of discontent rings out from small towns to big cities, from sea to shining sea. Dip your toe into Bayview’s reviews on any number of sites that allow people to post complaints, and the choir is deafening.
In numerous posts on the Consumer Affairs website, reviewers blame Bayview’s tactics for heart attacks, panic attacks, even divorce. A few posts tell of “inspectors” sent by Bayview to break into homes and verbally abuse the residents. Through PissedConsumer.com, I got in contact with one of Bayview’s most assiduous disparagers, a forty-nine-year-old information security engineer named Jeff Mathis.
As Mathis tells it—and, as we’ll see, Bayview rebuffed attempts to get its perspective—he was laid off in 2011. Without missing a mortgage payment on his home outside of Atlanta, Georgia, he asked his lender, Bank of America, for a modification to ease the debt. Bank of America promptly offloaded his loan, which went through a series of hands before ending up with Bayview.
Mathis, who has compiled voluminous documentation of his experience, says Bayview took his monthly payments, which averaged about $800, put them into escrow without explanation, then piled on fees for failure to pay. The charges snowballed to $3,000 per month. Within a year of getting the service contract on his mortgage, Bayview initiated foreclosure and Mathis, whose Linkedin profile cites a job history with IBM and AT&T, went flat broke.
Mathis didn’t roll over. He discharged the mortgage in bankruptcy and reached out to U.S. Senator Johnny Isakson of Georgia, the attorneys general of Florida and Georgia, the Consumer Financial Protection Bureau, the Georgia Department of Banking and Finance, the FBI, and his local police in Gwinnett County. None of it stopped Bayview. The loan servicer completed foreclosure in April 2017, and M&T Bank, which has a $300 million stake in Bayview, took ownership.
In the second week of June, while Mathis and his wife were awaiting eviction from the Georgia bungalow they had bought a decade earlier, the Gwinnett County police showed up. Someone had filed a complaint of criminal damage to the property. Mathis ended up getting tased and arrested, according to a police incident report.
Mathis, who believes Bayview was behind the call to police, is now facing up to eleven years in prison. The charge, he says, has made it difficult to find work. “Not even Goodwill will take me,” he says. He now lives in an apartment with his wife, but all of their possessions, he says, are locked in their old house. Mathis is ill, with a heart condition. The tops of his feet go icy and numb. He’s stressed, scattered in his thoughts, sending out email blasts to journalists and lawyers in all caps, virtually screaming for help.
Mathis says the last communication he’s received from Bayview was an “acknowledgment letter” dated November 16, 2017. It states that his “inquiry will be reviewed promptly as it is our goal to provide excellent customer service.”
Bayview’s public profile consists of a website, press releases from credit rating agencies, and Securities and Exchange Commission filings. According to the website, the company’s mission is to “deliver the highest level of customer experience in the mortgage servicing industry by providing easy loan management, help in the face of financial hardships, respect in every interaction, and regulatory expertise.”
Like the antagonists in The Big Short, Bayview bundles mortgages and sells shares on their performance. The homeowner is a revenue source, not a customer.
Like the antagonists in The Big Short, Bayview bundles mortgages and sells shares on their performance. It offers large clips of loans that originated before Dodd Frank, thereby dodging key homeowner protections. Investors often “hedge,” meaning that they mitigate risk by finding ways to profit on bad performances.
Bayview sells similar bets, up and down, on its collection efforts. These “products” are made of pools of debt-collection contracts. In other words, Bayview offers investors a way to profit on the speed and ferocity of its debt collection.
The homeowner is a revenue source, not a customer.
Of course, Bayview doesn’t foreclose on every mortgage. The choice as to which homeowners get the axe likely falls to Black Knight, a software program that claims to service thirty million active mortgages. Once Bayview has foreclosed on a property, it often goes “Real Esate Owned-to-rental,” converting the foreclosed on owner-occupied homes into rental units.
In 2010, investment firms entered an REO-to-rental craze. Within a year, they were snatching up 27 percent of homes for sale, according to a report in the New Republic. In 2012, Blackstone, the world’s largest alternative investment firm and a multibillion-dollar stakeholder in Bayview, announced a two-year plan to buy $100 million of homes per week. In a single weekend, the firm bought 1,400 homes in Atlanta.
To execute the necessary transactions, Bayview spawns companies, mostly limited liability companies (LLCs). From filings with secretary of state offices across the country, these appear to number in the hundreds, perhaps as many as 1,000. Many companies appear, then soon after dissolve.
To execute the necessary transactions, Bayview spawns companies, These appear to number in the hundreds, perhaps as many as 1,000. Many companies appear, then soon after dissolve.
The purpose of this wildly confusing corporate structure is to isolate risk.
Each company serves as a layer of protection. One LLC to the next, as the name suggests, limits liability. Each one is a shield, a corporate veil. If one entity is sued, emptied out, or otherwise broken, endless others go untouched.
Across the company filings, three men have spangled their names: David Ertel, David Quint, and Brian Bomstein.
They hold upper-tier positions in Bayview companies, including Bayview Financial, Bayview Assets, Bayview Solutions, Bayview Opportunity, Bayview Master Opportunity, Bayview Lending, Bayview Loan, Lakeview Loan, Interbay, and many others.
Both Ertel and Quint, according to their public profiles, attended the Wharton School at the University of Pennsylvania in the late 1980s, earning master’s degrees. That may be where they met, before starting Bayview in 1993. Bomstein, a lawyer, attended Vanderbilt and the University of Miami. According to the few photos of them on the Internet, each looks at ease in a button-up. They work out of a fourth- and fifth-floor suite in Coral Gables, thirty miles from the tip of Florida.
Over the course of several weeks, I called Bayview multiple times, trying to find someone who would talk about the company and its operations, to no avail. One media contact number yielded only a breezy, “Thank you for calling about Dish Network!”
I sent Bomstein an email using an address I found in a publication from the Cayman Islands government, detailing the three Cayman-registered Bayview companies he liquidated on a single day in December 2016. He did not respond.
Blackstone spokesman Matt Anderson stated in an email that the company has a 16 percent ownership share in Bayview, not “a controlling stake or board seats.” He declined to answer other questions about Bayview, but said “keeping borrowers in their homes is very often the best outcome for both homeowners and investors, which is why Bayview actively engages in mortgage modifications.”
Whatever and whoever Bayview is, it has a profitable partner in the federal government.
In January 2009, the Treasury Department kicked off the Home Affordable Modification Program (HAMP), designed to avert foreclosure for the four million homeowners whose loans the government had purchased from banks faltering under the subprime mortgage crisis. HAMP, however, did not come with a retinue of mortgage servicers, so the Treasury Department farmed this job out.
The contracts and fee schedules rewarded foreclosing over keeping families in homes, according to a report from the National Consumer Law Center. Naturally, Bayview Loan was champing at the bit.
In July 2009, it won a contract from the government worth up to $44.3 million. The following year, despite an Associated Press report detailing Bayview’s abuse of homeowners, the Treasury Department boosted the contract to $147.25 million.
Bayview, it should be noted, was collecting on the mortgages, as the Treasury Department wanted. Given the chance, however, Bayview prefers to own the mortgages. Beginning in 2012, the Department of Housing and Urban Development gave Bayview a new opportunity to acquire raw mortgage material.
HUD, in its mission to create affordable housing, sets up insurance through the Fair Housing Office for banks that lend to low- and middle-income home buyers. The borrower pays the insurance premiums through an upfront payment and monthly charges. If the borrower falls behind, the bank can get a payout from that insurance policy and then sell its side of the mortgage to HUD.
As a consequence, HUD holds a lot of mortgages, and in 2012 it started auctioning them in bulk through a program called the Distressed Asset Stabilization Program (DASP). Within three years, HUD off-loaded 105,000 loans under this program at a huge discount of $17 billion. To guard against predation, HUD set aside pools that grouped mortgages according to neighborhood, stayed foreclosures for up to a year, and invited nonprofits to bid.
Bayview entered every one of these “Neighborhood Stabilization Outcome” auctions. According to a HUD report from March 2017, Bayview has snatched up 10,000 single-family homes under this program. That’s 50 percent of the NSO mortgages up for sale. Nonprofits rarely crawled out of the single digits.
Overall, Bayview has purchased nearly 28,000 mortgages under DASP. It’s the largest single buyer, successfully adding tens of thousands more low-income families to the Bayview revenue stream.
I’ve been touring my home city of Philadelphia with a list of Bayview-attached properties I got from the Recorder of Deeds office. My first stop was on South Fifty-ninth in West Philly, not far from my home. As I knocked on the door, its mailbox overflowing with notices, an older man in a maroon pickup truck called to me from the street, “Are you the new tenant?”
A fair assumption. Arty white people like me are moving farther west in Philadelphia in search of cheaper rents.
He hopped out of the truck and introduced himself. His name was Bernard Lindsay Jr., a contractor who had worked on the house for the previous owners. “They lost it to the bank and moved to Maryland.”
A woman walking by with her dog corrected him: “They lost it to the bank and moved to Virginia. They moved to Virginia.”
“Greener pastures,” said Lindsay. Then he pointed at the house. “This house is in trouble,” he said, still assuming, I think, that I was moving in.
He showed me a gaping seam in the new flashing on the porch roof. “That’s a sponge,” he said. The roof would take in water. “That whole thing could come down.”
He showed me a gaping seam in the new flashing on the porch roof. “That whole thing could come down.”
Worse, out back in the postage-stamp yard, a tree loomed in a diagonal over the two stories. “That tree is dead,” said Lindsay, “it’s gonna come down on that house.”
Across Philadelphia, I’ve seen signs of foreclosure and REO-to-rental. Empty hair salons and corner stores. Single family homes, now for rent from management companies, at times split up into units signaled by new, aluminum multislot mailboxes nailed to the brick facade.
“We have investor-owned areas now. So you have to ask, what kind of neighbor does an investor make?” asks Ira Goldstein of the University of Pennsylvania’s urban studies program and president of Reinvestment Fund, an advisory firm that works to build wealth in low-income communities. He notes that these properties are priced low to move in bulk, depressing the neighborhood appraisals. “Some do a conscionable job maintaining the properties,” Goldstein says. “Others . . .”
He continues, “You run the risk of investors with no stake in the neighborhood, in its stability and growth.”On one of my tours in November, I stopped in North Philly to see my friend Mike and his family. They were homeless, staying for the time being in the basement of an apartment building. Mike and his partner had softened the concrete floor with air mattresses and thick blankets and arranged lamps for gentle light. He and I sat on a picnic table by the coin-op washing machines and talked a while. A few weeks later, I headed out for Bayview.
While my phone calls to Bayview had failed, I found a listing for a branch office in nearby Fort Washington, Pennsylvania. I passed more Bayview properties en route: A barbershop had shuttered and the apartments above had suffered fire damage. An Islamic bookstore had moved. Blue tarps hung in the windows. In half an hour I had reached 1301 Virginia Drive, the address on the website.
I peered into the Bayview office lobby. Movers’ dollies rose up in stacks. In the parking lot outside of the four-story black-and-tan office building, sat four thirty-foot dumpsters brimming with office furniture.
I climbed up the first. A whiteboard facing the sky had a drawing of a flower and said, “Everyone 100%.” Another whiteboard quoted Elon Musk: “When something is important enough, you do it even if the odds are not in your favor.”
Who wrote it and for whom, and what were they getting pumped up to do, and what were the odds against them? I called Bayview Loan, pressed zero, and asked the operator if they had moved the Fort Washington office. She hung up. I called again, got someone else and asked: “Where’s the new office? I’d like to stop by.”
“We wouldn’t like that,” she said.
I tried a third time a few minutes later while driving around the neighboring office parks, checking the signs for Bayview.
“Did you move the Pennsylvania office?” I asked.
“I don’t know,” said a woman named Raven. “I’m in Kansas.”
“Okay,” I said.
“Thank you for calling Bayview,” said Raven. “I’m glad we could be of service.”
With that she hung up.
Thomas Fox Parry lives in Philadelphia, where he writes fact for freelance and fiction for the future.
What to Do If a Mortgage Servicer Comes for You
Document any errors and respond in writing. First, you should get “transfer” and “welcome” letters from your lender and the servicer. Check for inaccuracies there and in the servicer’s first mortgage statement. Errors at this stage are widespread, says Rachel Labush, an attorney for Community Legal Services of Philadelphia, a civil legal aid organization that, among other things, defends homeowners facing foreclosure. Dispute the errors in a letter to the servicer. Labush recommends putting at least one of the following phrases at the top: “Qualified Written Request,” “Notice of Error,” or “Request for Information.” The servicer is supposed to correct the errors in thirty days or face potential fines and legal liability.
Submit a complaint with the errors, and any other hinky stuff, to the Consumer Financial Protection Bureau. It’s good for documentation. Also, the CFPB has a direct channel to the company, as well as teeth to enforce the federal regulations on mortgages. It’s easy to find on the bureau’s website how to submit a complaint.
Talk to a housing counselor. These are professionals trained to advise on how to protect people’s homes and credits. HUD funds them across the country, at no cost to consumers. See consumerfinance.gov/find-a-housing-counselor.
Get a lawyer. The vast majority of homeowners facing a foreclosure suit are not represented. Worse, many don’t attend hearings and conferences and lose by default. So show up and make sure your lawyer files an answer to the foreclosure suit.
—Thomas Fox Parry