N.Y. AG responds to report that Wells Fargo did not comply with National Mortgage Settlement

NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman responded Wednesday to a progress report that found Wells Fargo failed to comply with the timeline servicing standards of the National Mortgage Settlement.

Joseph Smith Jr., the monitor for the settlement, released a progress report Wednesday evaluating the compliance of Wells Fargo, JP Morgan Chase, Citi, Bank of America and Ally Financial/GMAC with the mortgage servicing standards mandated by the settlement. Smith found Wells Fargo failed to comply with the servicing standard governing the timeline for notifying borrowers of application deficiencies for mortgage modifications.

In May, Schneiderman announced plans to pursue enforcement actions against Wells Fargo and Bank of America for allegedly violating service standards related to loan modification application processing. The monitor's finding affirms Schneiderman's assertion that Wells Fargo is not living up to its settlement obligations.

"Today's report by the National Mortgage Settlement Monitor affirms that the pattern of violations by Wells Fargo that my office documented in New York is harming homeowners nationwide," Schneiderman said. "Recent reports from Bank of America whistleblowers that the bank actually encouraged improper delays of modification applications are also deeply disturbing, and reinforce our concern that these banks are flouting their legal obligations under the settlement. These flagrant violations put homeowners in New York and across the nation at greater risk of foreclosure. I intend to use every tool available to my office to hold these banks accountable under the terms of the National Mortgage Settlement."

The monitor was not able to assess Bank of America's compliance with the timeline, but Bank of America disclosed failing at least one of the standards Schneiderman complained of.

Last year, Schneiderman joined 48 states, the Department of Justice and the five largest mortgage servicers in the U.S. in the $25 billion settlement. The settlement includes 304 servicing standards that the participating services must adhere to.

Schneiderman's office has collected complaints citing hundreds of servicing standards violations by Wells Fargo and Bank of America.