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New York to sue BofA, Wells Fargo over mortgage practices
New York Attorney General Eric Schneiderman said on Monday he plans to sue Bank of America Corp (BAC.N) and Wells Fargo and Co (WFC.N) for violating the terms of a settlement designed to end mortgage servicing abuses.
The announcement, which suggests lawsuits could be filed against the banks within two months, comes ahead of a report from the monitor for the settlement, which is expected to be critical of banks.
Schneiderman said that since last October his office had documented 339 violations of standards - 210 by Wells Fargo and 129 by Bank of America - dictating the timeline for banks to process mortgage modification applications.
"Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure," the attorney general said in a statement.
A spokeswoman for Wells Fargo declined to comment. A spokesman for Bank of America did not immediately return a call for comment. A spokeswoman for the settlement monitor had no immediate comment.
Bank of America and Wells Fargo are among five banks that agreed to the settlement in February 2012. Schneiderman did not say how the other three banks - JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N) and Ally Financial Inc - were performing.
The National Mortgage Settlement was brokered between the banks and 49 state attorneys general. The banks agreed to cut mortgage debt amounts and restructure troubled loans.
While the settlement's monitor has issued several reports on monetary relief provided to homeowners under the settlement, an upcoming report, expected in the next few weeks, will be its first assessment of compliance on troubled borrowers, including how quickly banks must respond to requests for loan modifications.
Schneiderman said he would seek injunctive relief and an order requiring the two banks to comply with the settlement. His statement did not say he was seeking damages or penalties.
He said his action would be the first law enforcement claim under the settlement, which he said allows any party to bring action following a 21-day notice to the monitoring committee.
Schneiderman said he informed the committee of his intent to sue. During the 21-day period, he said, the committee may choose to pursue litigation under its own authority or may defer action. If the committee defers, he said, he is allowed to pursue the claim on his own after another 21 days.
"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," Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project in New York, said in a statement.
The February 2012 settlement released the banks from claims over faulty foreclosure practices and the mishandling of requests for loan modifications.
It was supposed to speed mortgage relief to homeowners in need and provide $2,000 payments to borrowers who lost their homes to foreclosure.
[Source: By Karen Freifeld, Reuters, New York, 06May13]
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