New York Attorney General Plans To Sue Two Major Banks

May 6, 2013
Originally published on May 6, 2013 8:00 pm
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Bank of America and Wells Fargo are back in the spotlight, accused of violating the terms of last year's landmark national mortgage settlement. New York's attorney general said today, he plans to sue the two mega banks for failing to live up to their commitments to borrowers. NPR's Dan Bobkoff reports.

DAN BOBKOFF, BYLINE: In addition to doling out $25 billion in aid to homeowners, last year's national mortgage settlement included more than 300 rules designed to reform how mortgage companies do business. For instance, acknowledging a loan modification request within three days or telling a homeowner he's missing paperwork within five days. And the banks must make a decision on a loan modification application within a month.

New York Attorney General Eric Schneiderman says the two major banks have repeatedly and consistently violated these rules as they serviced loans.

ERIC SCHNEIDERMAN: In case after case, Wells Fargo and Bank of America have failed to meet these requirements. And remember, if you are a homeowner facing foreclosure, time is your greatest enemy.

BOBKOFF: Schneiderman says his office has documented 339 violations since October. He says the banks have failed to correct practices that left many in a kind of mortgage purgatory.

SCHNEIDERMAN: Homeowners getting lost in a sea of paperwork requirements, families trapped in a dizzying array of complex rules and proceedings and far too many left out in the cold by banks who, in some cases, never even bother to respond or correct errors in applications for mortgage modifications.

BOBKOFF: This suit is expected to ask the court to force the banks to comply. Of the complaints, 210 are against Wells Fargo and 129 are against Bank of America. Wells Fargo had no comment. Bank of America said in a statement that it's provided relief to more than 10,000 New Yorkers through the settlement. And it says it takes the 129 customer servicing problems seriously.

There is an official in charge of making sure the mortgage companies keep up their end of the bargain. Joe Smith, the official monitor of the National Mortgage Settlement, says he'll be issuing his own report on the bank's compliance in June. And without explicitly endorsing the suit, he says he agrees there are areas where the banks must improve their treatment of their customers. Dan Bobkoff, NPR News, New York.


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