Bank of America Corp. (BAC:US) and Wells Fargo & Co. (WFC:US) violated terms of a nationwide settlement reached last year over banks’ residential mortgage foreclosure practices, New York Attorney General Eric Schneiderman said.
The two banks have failed to comply with standards established for processing homeowners’ loan modification applications, Schneiderman said today in a statement. He said he plans to sue the banks unless a committee set up to monitor the settlement’s terms takes action.
“Wells Fargo and Bank of America have flagrantly violated their obligations under the settlement,” Schneiderman said today at a news conference.
Schneiderman said delays by the banks in processing mortgage loan modifications have caused New Yorkers to incur fees and fall further behind in payments, putting them at even greater risk of losing their homes.
Bank of America said in a statement that “through March we have provided relief for more than 10,000 New York homeowners through the national mortgage settlement, totaling more than $1 billion.” The bank said it will work quickly to address the customer complaints Schneiderman identified.
“It is unfortunate that the New York attorney general has chosen this route rather than engage in a constructive dialogue through the established dispute resolution process,” San Francisco-based Wells Fargo said in a statement. The bank said it has helped more than 70,000 homeowners throughout the U.S. under the settlement.
Bank of America, based in Charlotte, North Carolina, and Wells Fargo were among five lenders that entered into the settlement with 49 states and the U.S. government. The deal sets standards for servicing mortgage loans and provides homeowners with relief including loan modifications. It followed a probe by state attorneys general into claims of abusive foreclosure practices after the housing bubble collapsed.
The accord has resulted in $1.8 billion in mortgage relief for New York homeowners, Schneiderman said. Citing 339 documented violations related to the timeline for processing mortgage modifications, Schneiderman said he notified the settlement’s monitor, Joseph Smith, and the monitoring committee of his intention to bring a claim.
The committee may pursue its own action against the banks for the alleged violations, according to the statement.
“Like General Schneiderman, I continue to believe there are areas in which the banks must improve their treatment of their customers,” Smith said today in a statement.
A report on the banks’ compliance with the settlement will be issued next month, he said.
Citigroup Inc., JPMorgan Chase & Co. and Ally Financial Inc. were also part of the national settlement.
At Schneiderman’s news conference, Joyce Harden of Far Rockaway, New York, said her family spent almost four years trying to apply for a loan modification from Wells Fargo after her husband lost his job because of an injury. She said they submitted documents to the bank “over and over.”
“We know that with every month we are getting deeper and deeper into a hole,” Harden said.
Iowa Attorney General Tom Miller, who helped lead negotiations with the banks on the settlement, said his office has received complaints from homeowners that the mortgage servicers are “still falling short in some areas.” He said he would review the information submitted by Schneiderman.
“We all share the same goals of ensuring that the servicers comply with terms of the settlement,” Miller said in a statement.
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