Abigail Field: NYAG’s Standing to Sue BofA
NY AG Eric Schneiderman’s suit to bring meaning to the servicing standards of the National Mortgage Enforcement Fraud rises and falls on how the D.C. Circuit interprets two provisions of the Consent Judgment.
In my last post, I explained that one provision–the one sentence section II–seems to require that the banks comply to the letter of the servicing standards in Exhibit A, notwithstanding the elaborate metrics/monitoring process that institutionalizes banks’ right to violate the standards so long as they don’t do it too often. If it doesn’t Schneiderman has no suit.
But even if it does require perfect compliance, the AG has one more argument he has to win. I didn’t explain that properly last post. Here’s the key part:
“3. Enforcement Action. In the event of an action to enforce the obligations of Servicer and to seek remedies for an uncured Potential Violation for which Servicer’s time to cure has expired, the sole relief available in such an action will be:
(a) Equitable Relief….
(b) Civil Penalties….”
NY AG Schneiderman’s right to sue hinges on how the bolded language is read. If “enforce the obligations of Servicer” means the same thing as “seek remedies for an uncured Potential Violation”, then there’s no right to sue until the metrics process really plays out. Bank of America would then be right. (See the end of its letter to A.G. Schneiderman.)