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NY AG Vs BoA, WFC

The attorney general for the state of New York has given notice that he intends to sue Bank of America Corp. and Wells Fargo & Co. for not keeping up their end of the mortgage servicer settlement. At issue are response times on loan modifications.

New York Attorney General Eric T. Schneiderman announced Monday that he intends to file lawsuits against Bank of America and Wells Fargo. The litigation is in response to complaints by borrowers in the Empire State.

Schneiderman said that he has sent a letter to the servicer settlement monitor, Joseph Smith, and to each member of the monitoring committee — the parties that oversee the national settlement.

Members of the committee include California Attorney General Kamala Harris, Florida Attorney General Pam Bondi and Texas Attorney General Greg Abbott.

The letter advises them about New York’s intention to sue BofA and Wells. It will be the first legal enforcement action taken in connection with the national settlement.

The settlement agreement allows Schneiderman to bring an enforcement action in U.S. District Court for the District of Columbia following a 21-day notice to the monitoring committee.

“During the 21-day notification period, the committee may choose to pursue the litigation on behalf of the party using the committee’s own authority under the settlement, or they may defer action,” Schneiderman’s announcement said. “If the committee defers then the complaining party may pursue the legal claim on their own after waiting an additional 21 days.”

Schneiderman said that a significant amount of back-up documentation demonstrating the severity of the violations accompanied the letter. He hopes to obtain injunctive relief and persuade the court to require strict compliance with the terms of the settlement.

The pair of banking behemoths are accused of repeatedly violating the terms of the $25 billion national mortgage settlement signed in February 2012 by BofA and Wells in addition to the remaining five-biggest servicers at the time — JPMorgan Chase & Co., Citibank and Ally Financial.

The state said that since October 2012, it has documented 339 servicing standards violations by Wells and BofA. There were 304 servicing standards established through the settlement, and the two firms allegedly violated standards that dictate timelines for banks to process loan modification applications.

“Specific, rigorous, and enforceable steps to protect homeowners” were “flagrantly violated” by BofA and Wells Fargo, Schneiderman said.

The state highlighted one couple, Joyce and Alton Harden, whose setbacks included an on-the-job injury and massive home damage from Hurricane Sandy. The couple had allegedly been negotiating a loan modification with Wells Fargo for three years and were in foreclosure when one group stepped in to help them submit a full loan modification to Wells in March.

The attorney general said that he has been told that all five of the servicers that participated in the settlement have “persistently failed to provide fair and timely services to their customers.”

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