N.Y. AG Revising Foreclosure Settlement Complaint Against Wells, B of A
New York's Attorney General charged Bank of America and Wells Fargo with hundreds of cases of failure to comply with the national mortgage servicing settlement recently. The claims made for lots headlines but may prove a non-starter in court.
New York's attorney general blasted Wells Fargo and Bank of America for "flagrantly" disregarding their promises to help homeowners under last year's 49-state mortgage servicing pact.
Documentation failings: they aren't just for bankers.
New York Attorney General Eric Schneiderman is revising his allegations of foreclosure settlement violations by Wells Fargo (WFC) and Bank of America (BAC), resetting the clock on his plans to sue the banks over 339 alleged servicing violations.
Under the national mortgage settlement agreement, Schneiderman must give the other settlement parties 21 days before pursuing litigation. Schneiderman asserted during his May 6 press conference that his office was ready to bring a case, making the re-submission something of a do-over.
The cause of the revisions is unclear, as is the question of whether complaints will be resubmitted for each of the cases. A spokeswoman for the office was checking on this late Friday afternoon.
The attorney general "temporarily suspended" his complaints earlier this week, according to the office of Iowa's Attorney General, who is on the monitoring committee for the national foreclosure settlement. Iowa declined to comment on why New York's original grievance was retracted.
"We are sending the [mortgage settlement] monitoring committee more information which we believe will help them in their analysis of their enforcement action," a spokeswoman for Schneiderman told American Banker. "We expect to have that to them by the middle of next week.."
At the original press conference, Schneiderman hoisted a six-inch stack of documents as photogenic proof that Wells and B of A had "flagrantly violated" their obligations to provide timely modification responses and fulfill other settlement commitments.
Schneiderman's spokeswoman did not comment on what, if any, problems the original complaints contained.
Consumer advocates have repeatedly cited instances in which banks have failed to meet the standards laid out in the national mortgage servicing settlement. Banks have acknowledged some of the errors.
Even so, Schneiderman's announcement that he was filing lawsuits raised hackles in the industry, where it was seen as a highly public bid to bypass the compliance process overseen by Joseph Smith, the national mortgage settlement monitor. Smith is expected to release a report on the banks' compliance in the near future.
At the time of Schneiderman's original press conference, Wells Fargo said it was disappointed that the attorney general had opted for "this route" rather than engaging "in a constructive dialogue through the established dispute resolution process." A few days later, Bank of America attorneys sent the New York AG a letter stating that he lacked standing to sue and asking that he retract the complaints.
Both banks declined to comment on the suspension of the complaint. The office of the settlement monitor also declined comment.
"General Schneiderman is the best source for you on his suit's progress," a spokeswoman for Smith's office wrote in an email. "The Monitor continues to be hard at work on his reports about the banks' compliance with the servicing standards and looks forward to discussing what he has found with the public in the coming weeks."
Kate Berry contributed to this article.