More On Legal & Compliancefrom The Advisor's Professional Library
- Scope of the Fiduciary Duty Owed by Investment Advisors A fiduciary obligation goes beyond the suitability standard typically owed by registered representatives of broker-dealer firms to clients. The relationship is built on the premise that the advisor will always do the right thing for the person or entity receiving advice.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
New York Attorney General Eric Schneiderman said Monday that his office plans to sue Bank of America (BAC) and Wells Fargo (WFC) for repeated violations of the terms of the National Mortgage Settlement of 2012.
The settlement required the five largest mortgage-servicing banks to “improve their customer service practices by complying with new mortgage servicing rules, known as the Servicing Standards,” according to a press release put out by Schneiderman’s office. The rules include four standards with a timeline for when the banks should process mortgage-modification applications.
The attorney general says this office has documented 339 violations of those standards by Wells Fargo and Bank of America since October. A letter has been sent to the two banks. The planned suit would be a “first” involving the National Mortgage Settlement, according to Schneiderman.
“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 in a press release.
“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” he said. “I intend to use every tool available to my office to hold these companies accountable under the terms of the National Mortgage Settlement.”
In 2012, 49 states, the Department of Justice and the five largest mortgage servicers negotiated a settlement worth $25 billion of consumer relief, including mortgage modifications for at-risk homeowners. The arrangement entails 304 Servicing Standards.
These rules were incorporated into the National Mortgage Settlement in order to address long-standing complaints from consumers and advocates about servicers subject to the arrangement—Ally Financial/GMAC, JPMorgan Chase (JPM), Citibank (C), Bank of America and Wells Fargo.
The Servicing Standards prohibit dual tracking (the practice of negotiating a loan modification with a borrower while simultaneously pursuing foreclosure), require that every customer requesting assistance be assigned a single point of contact, and include four requirements that dictate a timeline of when servicers must respond to customers seeking loan modifications.
“Wells Fargo is committed to full compliance with the National Mortgage Settlement and its associated standards," the bank said in a statement. "It is unfortunate that the New York Attorney General has chosen this route rather than engage in a constructive dialogue through the established dispute-resolution process."
According to the San Francisco-based company, "We fully support the rules established under the Settlement and we will continue to provide transparency into the progress we are making to provide relief to consumers. Wells Fargo has helped more than 70,000 homeowners across the country through National Mortgage Settlement Programs, and we will continue to do everything we can to help all borrowers, including the New York families described today.”
For its part, Bank of America said, "Through March, we have provided relief for more than 10,000 New York homeowners through the National Mortgage Settlement, totaling more than $1 billion. Attorney General Schneiderman has referenced 129 customer servicing problems which we take seriously and will work quickly to address."
It added: "This agreement has been good for New York, and we continue using these beneficial programs to assist troubled homeowners in New York and nationally. ”
Schneiderman’s letter to the mortgage settlement’s Monitoring Committee on the intent to sue Bank of America and Wells Fargo is posted online.
More on AdvisorOne: