New York”™s attorney general said he has reached a settlement with one bank accused of violating terms of a multistate agreement on mortgage relief by loan servicers but will move forward with a federal lawsuit against another.
Attorney General Eric T. Schneiderman said he will ask a federal judge to compel Wells Fargo to honor its commitments under the 2012 National Mortgage Settlement. The attorney general in May announced his intention to sue Wells Fargo and Bank of America, among the nation”™s five largest mortgage servicers that were parties to the agreement, for repeatedly violating agreed-to servicing standards in their dealings with New York property owners trying to obtain loan modifications to avoid mortgage defaults and foreclosures on their homes.
Schneiderman said his office suspended legal action against Bank of America after the bank agreed to implement “a robust set of systemic reforms” to honor servicing standards in the National Mortgage Settlement. If successful in New York, Bank of America is expected to roll out the reforms nationwide, he said.
“While we have brought much needed relief to thousands of New Yorkers, too many homeowners in our state are facing unnecessary challenges as they fight to keep their homes,” Schneiderman said in the announcement. “While Bank of America has chosen to work with us to take the steps required to adhere to their commitments, Wells Fargo has taken a different path.
The attorney general said Bank of America has committed to these actions:
Ӣ Designate high-level staff with decision-making authority to every housing counseling and legal services agency that is part of the attorney generalӪs Homeowner Protection Program. The senior bank staffers will work with the agencies to reach prompt resolution on all pending or delayed loan modification requests.
”¢ In consultation with the Office of the Attorney General, Bank of America will redesign its “missing documents” letter to ensure that this communication is clear and that borrowers know exactly what information is needed to move forward with a loan modification request.
Ӣ Bank of America will stop transferring the servicing rights to third parties on New York mortgages when borrowers are already in negotiations for a loan modification with bank staff or are making trial payments on a loan modification.
Ӣ The bank will grant borrowersӪ attorneys permission to negotiate loan modifications with Bank of America staff directly, as opposed to the bankӪs outside foreclosure lawyers, who typically are far removed from the loan modification and loss mitigation process.
The attorney general could resume legal action if Bank of America fails to meet the terms of the agreement.
Schneiderman said Wells Fargo officers declined to sign a similar agreement after months of negotiations. He called it “sad and shameful” that Wells Fargo refused to commit in writing to “common-sense reforms that every mortgage servicer should be following already.”
A bankruptcy, foreclosure and mortgage defense attorney in White Plains recently described Wells Fargo and Bank of America as the “two worst offenders” at stalling and delaying loan modifications to which homeowners are entitled by the National Mortgage Settlement.
Residential brokers in Westchester and attorneys representing homeowners here recently said delays and denials of loan modifications by banks have led to the surge in foreclosure notices field in the county this year. Through August, foreclosure filings were up 62 percent from the same period last year and foreclosure judgments rose 44 percent.
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