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.
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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 SFGate.com, 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.
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