Several States Respond to Violations of National Mortgage Settlement

Several States Respond to Violations of National Mortgage Settlement
Settlement Monitor Joseph Smith (left) and New York Attorney General Eric Schneiderman

Following the New York attorney general’s  announcement of pending lawsuits against two of the five banks in the National Mortgage Settlement, it has come to light that other AGs have complained of  lenders violating the rules of the year-old pact with 49 states.
They just haven’t taken the same very public and forceful step that was displayed by New York’s top prosecutor, a move that has drawn praise from homeowner advocates — many of whom have been relaying the scope and depth of the alleged violations to state officials.
New York Attorney General Eric Schneiderman Monday provided a preview of his pending lawsuits  — ahead of an anticipated report in June from the monitor of the multi-state settlement that is widely expected to be critical of the banks: Bank of America, Wells Fargo, JPMorgan Chase, Citi and Ally/GMAC.
Other AGs have opted to simply notify Joseph Smith, the settlement’s monitor, about a long list of mortgage-servicing complaints.
As appointed overseer of the settlement, Smith is subject to oversight himself by a monitoring committee that is composed of representatives of the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, and representatives of 15 states.
HUD General Counsel Helen Kanovsky, whose agency is on the committee, told the Hartford Courant that HUD takes violations of the settlement seriously and expected “further action to be taken” after Smith releases his findings, most likely next month.
(Read More: Who’s Grading the 5 Big Mortgage-Settlement Banks)
Massachusetts Attorney General Martha Coakley alleges that the banks are failing to offer timely assistance to borrowers, sending them inaccurate and confusing information. She sent a letter detailing those allegations to Smith.
Iowa Attorney General Tom Miller, who helped shape last year’s $25 billion settlement, said in a statement that his office has been discussing several issues with Smith about the banks’ compliance with new servicing standards, including missed deadlines.
Connecticut Attorney General George Jepsen, who is also on the monitoring committee, said he was aware of many of the issues raised by New York AG Schneiderman and will work with other committee members to ensure the banks comply with the settlement.
Consumer advocates praise Schneiderman for taking action faster, opting for the more aggressive approach of announcing that his state would file lawsuits against Bank of America and Wells Fargo over several violations, including failing to provide fair and timely assistance to homeowners who are trying to avoid foreclosure or negotiate a mortgage modification.
Florida Attorney General Pam Bondi was more non-committal in a statement.
“As one of the hardest hit states in the foreclosure crisis, we have been closely monitoring compliance with the national mortgage settlement, and we are in regular contact with several banks on behalf of complainants,” Bondi said.
Bondi said she looks forward to reviewing the information New York has provided.
Meanwhile, California has also taken a lower-profile stand regarding the talk of lawsuits. However, California also has a new law, the Homeowner Bill of Rights, which took effect Jan. 1. The bill of rights covers all mortgage servicers in California, not just the five in the settlement.
It was California’s housing counselors that helped raise awareness of the mortgage-settlement violations.
“There’s a lot of frustration that we don’t see compliance with the agreement and we don’t see better outcomes for homeowners who are trying to stay in their homes and for communities that are trying to stabilize,” Kevin Stein, associate director of the California Reinvestment Coalition, a San Francisco-based group that lobbies for low-income Californians, told the Los Angeles Times Monday.
According to, a source in California Attorney General Kamala Harris’ office said that since the bill of rights was enacted, “we have seen a steady decline in the kind of complaints” Schneiderman alleged.

6 thoughts on “Several States Respond to Violations of National Mortgage Settlement

  • May 8, 2013 at 4:25 pm

    Just last month, Rust put out a news release stating that the settlement checks for the National Mortgage Settlement (the ones for at least $840) would be going out the middle to end of May. Guess what! Today they are now saying they don’t know when they are going to send them out. Clearly, this is them being passive aggressive! I am so sick of these dirtbags.

  • May 8, 2013 at 4:37 pm

    You won’t see Maine in that article….Maine’s AG office thinks we don’t deserve ANY compensation for what we went through!! I’ve posted before that when I called Maine’s AG’s office last week to inquire on whether or not they knew dates or amounts from the NMS case I was rudely brushed off and told I should be happy for whatever I get – that it’s “free” money that I didn’t even have to hire a lawyer to get….then she sniffed down her nose at me saying if you want more, hire your OWN attorney!! I never said I wanted MORE…I didn’t bother to waste my time telling this horrible woman I HAD already hired my OWN attorney and WON!! GRRRR….so ashamed to say I’m from MAINE!!

  • May 8, 2013 at 6:11 pm
    Permalink … 2013-05-08
    Rust Consulting, the paying agent for the Independent Foreclosure Review (IFR) Payment Agreement, said today that a clerical error led to some borrowers in the May 3, 2013, wave of payments being sent checks for less than the amount that the Federal Reserve directed those borrowers to be paid. Rust has corrected the error and plans to mail supplemental checks to affected borrowers as soon as May 17, 2013, for the additional amounts they were to be paid. A letter explaining the reason for the supplemental check will accompany the supplemental check.
    In the wave of settlement payments mailed on May 3, 2013, approximately 96,000 borrowers whose loans were serviced by Goldman Sachs (Litton Loan Servicing LP) and Morgan Stanley (Saxon Mortgage Services, Inc.) were affected by the error. The remaining borrowers mailed checks on May 3, 2013 were not affected by the error.
    The correct total payment amounts are listed on the Federal Reserve Board’s website at … 0429a1.pdf.

  • May 9, 2013 at 7:48 pm

    To brileyrac, the woman at the state AG office needs to be told that your settlement money has been deposited with the state and has probably paid some of her salary this past year along with your tax dollars. And yes your settlement money because if the banks had not screwed with our mortgages and stolen our homes the states AG office would not have had reason to pursue a case against them. Most of the revenue from the settlement went to the AG offices and they chose to put it towards their general funds, some of the states used it for actual foreclosure help but not many and not much. We should have been compensated already and compensated much more as we were the reason that any settlement was originated. So dont take that treatment ask for her supervisor and report her nasty comments. Stay strong.

  • May 9, 2013 at 9:27 pm

    Thu, May 9, 2013 at 8:12 PM8:12 PM
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