Bank of America, Wells Fargo and other large banks are dragging their feet in processing homeowners’ requests for lower monthly payments under the $25 billion national mortgage settlement, said New York Attorney General Eric Schneiderman in a letter obtained Friday by The Washington Post.
Earlier this month, Schneiderman threatened to sueWells Fargo and Bank of America for violating the terms of the agreement, which was brokered last year between 49 attorneys general and the nation’s five largest mortgage servicers over foreclosure abuses.
New York’s top prosecutor said his office received 339 complaints that the two banks were not complying with the timeline requirements of the agreement. Homeowners said the banks took more than 30 days to respond to their requests to reduce interest rates or loan balances.
“We have learned that several other states have identified similar, recurring deficiencies by the participating servicers,” Schneiderman said in a letter dated May 23 to the monitor of the settlement, Joseph Smith. The attorney general told Smith that he intends to sue if the monitoring committee failed to bring the banks in line.
Schneiderman would not identify the other states or other banks being accused of violating the servicing standards set in the settlement, but the accusations echo those of other state attorneys general.
North Carolina Attorney General Roy Cooper told reporters Tuesday that some banks “have fallen short” of complying with the deal but declined to name names.
Illinois Attorney General Lisa Madigan said Tuesday that her office found that in 60 percent of the loan modification files they surveyed, servicers failed to notify borrowers of missing documents in their applications within five days. In 45 percent of the files reviewed, banks made multiple requests for the same documents in violation of the servicing standards.
“The new servicing standards were supposed to eliminate headaches for homeowners,” Madigan said in a statement. “But unfortunately, it seems we’re hearing about the same frustrating experiences. Homeowners are. . . experiencing continued delays that put them closer to foreclosure.”
The settlement monitor plans to release a report on the lenders compliance with the servicing standards in June, according to his office. Smith’s panel has 21 days to respond to Schneiderman’s allegations.
“Like General Schneiderman, I continue to believe there are areas in which the banks must improve their treatment of their customers,” Smith said. “I will thoroughly review the complaints he shared with me.”
In his letter, Schneiderman said his office submitted complaints that were collected from housing counselors and legal service providers. He stressed that the data “likely reflect just a fraction of the systematic violations” of the settlement by Bank of America and Wells Fargo.
Wells Fargo spokesman Vickee Adams said the bank would like to review the complaints from the attorney general to rectify any problems. “We continue to work within the framework to monitor and report our performance and constantly evaluate opportunities for ongoing improvements in our processes,” she said.
Similarly, Bank of America said it will work to address any problems brought to the bank’s attention. But spokesman Richard Simon pointed out that the bank has provided more relief under the settlement than any other servicer.
Indeed, Bank of America has contributed $27.9 billion of the $50.6 billion worth of loan modifications, short sales, refinancings and forbearance assistance that over half a million borrowers across the country have received, according to a report released Tuesday by the settlement monitor.
To date, Citigroup has provided $3.2 billion in relief to 54,742 homeowners. Ally Financial has given 8,866 borrowers about $657 million in assistance. Wells Fargo said it has helped 90,907 consumers with $5.7 billion in relief, while JPMorgan said it has provided $11.1 billion in help to 126,032 borrowers.