2 Big Banks Face Suits In Mortgage Pact Abuses
New York’s top prosecutor plans to sue two mortgage titans, Bank of America and Wells Fargo, over claims that they breached the terms of a multibillion-dollar settlement intended to end foreclosure abuses.
On Monday, Eric T. Schneiderman, New York’s attorney general and top prosecutor, said that the lenders violated the terms of the National Mortgage Settlement, a sweeping $26 billion pact brokered last year between five of the nation’s biggest banks and 49 state attorneys general. The agreement came during a national outcry over potentially widespread foreclosure abuses like shoddy paperwork, erroneous fees and wrongful evictions.
Mr. Schneiderman says that Bank of America and Wells Fargo did not follow guidelines dictating how the banks field and process requests from homeowners trying to modify their mortgages.
Under the terms of the settlement, banks have to abide by 304 servicing standards, like notifying homeowners of missing documents within five days of receiving a loan modification and providing borrowers with a single point of contact.
“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” Mr. Schneiderman said. Since October 2012, Mr. Schneiderman’s office has documented 210 separate violations involving Wells Fargo and 129 involving Bank of America.
The move by Mr. Schneiderman is the first time that an attorney general has readied a lawsuit against one of the five participating banks on charges related to the settlement, which was aimed at halting the housing market’s downward slump and doling out relief to homeowners in foreclosure.
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