Top NY official suing banks over mortgage settlement violations

“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure. I intend to use every tool available to my office to hold these companies accountable under the terms of the settlement.”

Schneiderman alleges that the banks violated the modification application process by failing to inform the borrower within three business days that they have received the loan modification application, notify them within five days of any deficiencies in the application, provide 30 days to submit any missing documents and update the loan file and provide the borrower with a decision on an otherwise completed application within 30 days. 

By the end of April, Schneiderman’s office had collected complaints citing 210 violations by Wells Fargo and 129 violations by Bank of America that they had not followed these timeline requirements. 

He sent a letter to the settlement monitor Joseph Smith and the committee notifying them of his intention to bring a legal claim.

The $25 billion settlement is between five firms — Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo — the Justice Department and 49 state attorneys general.  

The agreement includes mandated forms of consumer relief, such as mortgage modifications for at-risk homeowners, which could include lower-interest rates, forbearance agreements and principal reductions.

In April, Sen. Barbara Boxer (D-Calif.) urged federal officials to examine reports that banks were violating the settlement in California.