In a recent article written by Karen Freifeld and Aruna Viswanatha entitled: New York to sue BofA, Wells Fargo over mortgage practices, is reported that The National Mortgage Settlement, the largest consumer financial protection settlement in United States history (see), was brokered between the banks and 49 state attorneys general.
New York Attorney General Eric Schneiderman said on Monday he intends to sue Bank of America and Wells Fargo for violating the terms of a settlement designed to end mortgage servicing abuses.
Last year top banks reached an agreement about providing $25 billion in relief to homeowners and comply with a set of servicing standards to make amends for foreclosure misconduct. But as it turns out, the obligations of the deal are not carried out as expected.
According to Eric Schneiderman, 339 violations of standards dictating the time-line for banks to process mortgage modification applications has been documented since October 2012. Wells Fargo allegedly violated the servicing rules 210 times, while Bank of America allegedly violated the terms 129 times.
The Attorney General said in a statement, that he would seek injunctive relief and an order requiring the two banks to comply with the settlement. It is evident, he is not seeking damages or penalties.
The situation, in which many borrowers have got, is really difficult. Some borrowers, facing foreclosures some five years after the start of the housing crisis, say they wait months for word from their bank on a request to modify a loan, only to be told their paperwork has been lost.
“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” said Eric Schneiderman.
At Wells Fargo they refused to give any comments. Bank of America made a statement that it takes seriously the claims of servicing problems and will work quickly to take appropriate measures in the existing situation.
Bank of America and Wells Fargo are among 5 banks that agreed to the settlement in February 2012. It is unclear whether the other three banks (JPMorgan Chase, Citigroup Inc. and Ally Financial Inc.) could face similar lawsuits. But at the news conference, Schneiderman said his announcement had “implications” for the other servicers.
A report which will reflect how quickly banks must respond to requests for loan modifications is expected to appear soon.
The former North Carolina Banking Commissioner Joe Smith appreciated Schneiderman’s interest in the issue and expressed his strong wish to use the full force of his own power to hold banks accountable.
Iowa Attorney General Tom Miller and Connecticut Attorney General George Jepsen also want to fight for pushing the banks comply with the settlement.
Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project in New York, said in an interview that housing advocates were worried that a lot of problems still remained since last year’s settlement.
The February 2012 settlement released the banks from claims over faulty foreclosure practices and the mishandling of requests for loan modifications.
It was supposed to speed mortgage relief to homeowners in need and provide $2,000 payments to borrowers who lost their homes to foreclosure.