New York's Attorney General has issued a letter demanding that Wells Fargo (WFC) resume processing mortgage modification requests for borrowers in states hit by Hurricane Sandy. Wells Fargo, meanwhile, insists that the dust-up is a misunderstanding and that it has acted in hurricane-stricken borrowers’ best interests.

The bank has temporarily halted the reviews until it receives guidance from the Federal Emergency Management Agency, according to Attorney General Eric Schneiderman, though details of why Wells would have stopped processing are unclear. In a letter to Wells Fargo Chief Executive John Stumpf, the AG called the bank's actions "unconscionable" and a repudiation of its promise to promptly review modification requests under the terms of the National Mortgage Servicing Settlement.

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