National Mortgage Settlement: N.Y. Sues Wells Fargo, BofA Gets Reprieve

National Mortgage Settlement: N.Y. Sues Wells Fargo, BofA Gets ReprieveNew York’s attorney general said he is suing Wells Fargo to get the nation’s largest mortgage lender to comply with new servicing standards under last year’s five-bank settlement spurred by foreclosure-related abuses.
Meanwhile, Attorney General Eric T. Schneiderman said today that his office has reached an agreement to suspend a similar enforcement action against Bank of America, which has agreed to implement a “robust set of systemic reforms” to ensure that 304 servicing standards outlined in the National Mortgage Settlement are honored across New York State.
If the reforms are successful, it is anticipated that Bank of America will replicate this initiative nationwide, Schneiderman said.
As for Wells Fargo, the attorney general said he gave the lender ample time to agree to similar reforms. But the bank declined to sign any agreement “aimed at improving its customer service practices,” Schneiderman said.
“Despite the clear servicing standards outlined in the National Mortgage Settlement, too many Wells Fargo customers still must navigate months of needless delay, lost paperwork and wrongful denials in trying to obtain an affordable, sustainable mortgage modification,” said Meghan Faux of South Brooklyn Legal Services.
Vickee Adams, a spokeswoman for Wells Fargo, said Tuesday in a statement that “it is very disappointing that the New York attorney general continues to pursue his course, given our commitment to the terms of the national mortgage settlement.”
“Wells Fargo is proud of its track record of providing important relief to borrowers in New York and nationwide,” she said.
The servicing standards are included under the National Mortgage Settlement to fix longstanding complaints from consumers and advocates that servicers subject to the Settlement — Ally Financial/GMAC, JP Morgan Chase, Citibank, Bank of America and Wells Fargo — consistently failed to provide fair and timely services to their customers, particularly when trying to modify mortgages to prevent foreclosures.
“While Bank of America has chosen to work with us to take the steps required to adhere to their commitments, Wells Fargo has taken a different path,” Schneiderman said. “Both of these cases should send a strong message that the big banks must comply with the legally binding Servicing Standards negotiated in the National Mortgage Settlement, or face the consequences.”
Under the terms of the new agreement with New York, Bank of America has committed to:

  • Designate high-level staff with decision-making authority to every housing counseling and legal services agency that is part of the Attorney General’s Homeowner Protection Program. The senior Bank of America staffers will work with these agencies to reach prompt resolution on all pending or delayed loan modification requests.
  • In consultation with the Office of the Attorney General, Bank of America will redesign its “missing documents” letter to ensure that this communication is clear, and that borrowers know exactly what information is needed to move forward with a loan modification request.
  • Bank of America will stop transferring the servicing rights to third parties on New York mortgages when borrowers are already in negotiations for a loan modification with Bank of America staff or are making trial payments on a loan modification.
  • Bank of America will grant borrowers’ attorneys permission to negotiate loan modifications with Bank of America staff directly, as opposed to the bank’s outside foreclosure lawyers, who typically are far removed from the loan modification and loss mitigation process.

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