NEW YORK—New York State Attorney General Eric Schneiderman announced on Oct. 2 his office will sue Wells Fargo for failing to reform its mortgage servicing. Schneiderman said the bank has not complied with the terms of the 2012 National Mortgage Settlement agreed upon by 49 state attorneys general and the five largest mortgage servicing banks—Ally, JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo.
Schneiderman particularly emphasized the bank’s failure to speed up modifying mortgages for homeowners who are facing possible foreclosure.
“If you are a homeowner and your efforts to modify your mortgage are being delayed, fees and penalties mount up and it becomes harder and harder to get yourself out from underwater,” Schneiderman said.
Such delays can cause homeowners, who should be eligible to modify their mortgage terms, to fall further behind on their payments and end up facing foreclosure.
On May 6, Schneiderman announced plans to sue both Wells Fargo and Bank of America for violating the servicing standards agreed to under the National Mortgage Settlement. Since that date, the attorney general’s office has worked with both banks to hammer out specific steps the banks could take to improve the servicing of New York homeowners’ mortgages.
The attorney general said Bank of America has worked with his office to reach an agreement. Wells Fargo would not agree to any binding reforms, so his office is suing to uphold the 2012 National Mortgage Settlement.
Bank of America will assign staff with decision-making authority to expedite homeowners’ pending mortgage cases. The bank will also stop transferring mortgages to third parties when borrowers are in the middle of renegotiating. Bank of America has 120 days to make these and other changes or the state will sue.
Calls to Wells Fargo for comment were not returned by press time.