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N.Y. AG Schneiderman files BofA, Wells Fargo lawsuits for mortgage settlement violations

Eric T. Schneiderman

Eric T. Schneiderman

New York Attorney General Eric T. Schneiderman said last week his office plans to file suit against Wells Fargo and Bank of America for allegedly violating conditions established in a national mortgage settlement last year.

Under the settlement signed by 49 AGs, including Schneiderman, the five largest mortgage servicers in the U.S. are required to comply with new mortgage servicing rules—known as Servicing Standards—in order to improve customer service practices. The standards direct the banks to process mortgage modification applications within a certain period of time.

Schneiderman said that since October, his office has received 339 complaints related to violations of the settlement by Wells Fargo and Bank of America.

“The five mortgage servicers that signed the National Mortgage Settlement are legally required to take specific, rigorous, and enforceable steps to protect homeowners,” Schneiderman said. “Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure. I intend to use every tool available to my office to hold these companies accountable under the terms of the National Mortgage Settlement.”

Additionally, under the $25 billion settlement reached with Ally Financial/GMAC, JPMorgan Chase, Citibank, Bank of America and Wells Fargo, servicers are also prohibited from negotiating loan modifications with a borrower while simultaneously seeking property foreclosure and are required to provide customers seeking assistance with a single contact point.

The agreement also allows any party to the settlement to bring enforcement action in a U.S. district court in Washington, D.C., after a 21-day notice to the monitoring committee that oversees the agreement. The committee may then choose to pursue litigation on behalf of the party or defer action, which will allow the plaintiff to pursue legal action individually after an additional 21 days.

“We appreciate Attorney General Schneiderman’s efforts to hold the big banks accountable to communities,” Josh Zinner, the co-director of the Neighborhood Economic Development Advocacy Project, said. “The banks are systematically violating the terms of the National Mortgage Settlement, and we hope this action by the AG will push other state and federal regulators to draw a line in the sand against abusive mortgage servicing practices.”

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