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.