Mich. AG concerned terms of mortgage settlement not being met

By Jessica M. Karmasek | May 10, 2013

LANSING, Mich. (Legal Newsline) -- Michigan Attorney General Bill Schuette, in a letter Wednesday, said he is concerned that certain terms of the nationwide mortgage settlement are not being met by the five banks that signed on to the deal.

Schuette sent a letter to Joseph A. Smith Jr., head of the Office of Mortgage Settlement Oversight, alerting him to his concerns.

"As we continue to sort through the aftermath of the mortgage foreclosure crisis, Michigan homeowners can rest assured that we will hold all five banks accountable to the terms of the national mortgage settlement," the attorney general said in a statement.

In February 2012, 49 state attorneys general, including Schuette, and federal officials reached a deal with Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp. worth $25 billion.

The agreement, which institutes new protections for homeowners and nationwide reforms to mortgage servicing standards, only covers those mortgages held by the five banks, not Fannie Mae or Freddie Mac.

In his letter to Smith, Schuette, who is a member of the monitoring committee, said he takes any violations of the settlement's requirements "very seriously."

Earlier this week, New York Attorney General Eric Schneiderman announced his intention to sue Wells Fargo and Bank of America for allegedly engaging in repeated violations of the terms of the settlement.

Schneiderman's office said it has documented 339 alleged violations of new mortgage servicing rules, known as the servicing standards, by the two banks since October.

Schuette acknowledged the New York attorney general's concern in the letter to Smith.

"In particular, issues regarding servicers responding to borrowers in a timely manner to requests for modifications, servicers failing to notify borrowers of deficiencies in their applications for modification, giving borrowers time to supplement applications when necessary, timely decision making, and all the other servicing standards imposed by the settlement impact borrowers in a very real and direct way," he wrote.

Under the terms of the settlement, Smith was appointed by a court to monitor and determine if servicers are, indeed, compliant with the terms of the deal.

Smith works with a monitoring committee comprised of representatives of state attorneys general.

The committee meets to address the issues involved in the implementation and monitoring of the settlement, and holds regular discussions with Smith and his staff.

In addition to Michigan, current state members of the monitoring committee include: Arizona, California, Colorado, Connecticut, Florida, Illinois, Iowa, Maryland, Nevada, North Carolina, Ohio, Oregon, Texas and Washington.

The committee also includes state financial regulators, the U.S. Department of Justice and the U.S. Department of Housing and Urban Development.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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Citigroup New York Attorney General Wells Fargo & Company

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