New York Attorney General Targets Wells Fargo for Failure to Follow Servicing Standards of National Mortgage Settlement

Press Release from New York Attorney General:

NEW YORK – Attorney General Eric T. Schneiderman today announced that he is suing Wells Fargo so that a federal judge will compel the bank to honor its commitments under the 2012 National Mortgage Settlement. At a press conference in New York, Attorney General Schneiderman also announced that his office has reached an agreement to suspend a similar enforcement action against Bank of America, which has agreed to implement a robust set of systemic reforms intended to ensure that the servicing standards outlined in the National Mortgage Settlement are honored across New York State. If the reforms are successful, it is anticipated that Bank of America will replicate this initiative nationwide.

“While we have brought much needed relief to thousands of New Yorkers, too many homeowners in our state are facing unnecessary challenges as they fight to keep their homes,” said Attorney General Schneiderman. “While Bank of America has chosen to work with us to take the steps required to adhere to their commitments, Wells Fargo has taken a different path. Both of these cases should send a strong message that the big banks must comply with the legally binding Servicing Standards negotiated in the National Mortgage Settlement, or face the consequences.” 

When implemented, the agreement reached with Bank of America will correct many of the underlying issues that have prevented full compliance with the National Mortgage Settlement. The agreement leaves open the option to resume legal action against Bank of America if it fails to comply with the new terms.

. . .

For too long, homeowners in New York and around the country have been struggling as the big banks fail to honor the commitments they made in the National Mortgage Settlement,” said Ira Rheingold, Executive Director of the National Association of Consumer Advocates. “Every day that a struggling homeowner has to go back and forth with their mortgage servicer is a day they fall further behind and a day closer to needlessly losing their home.  I am pleased that Bank of America has agreed in writing to take real steps to adopt systemic changes that will help them honor their commitments, and applaud Attorney General Schneiderman for taking Wells Fargo to court to get them to do the same.”

The violations of the servicing standards were documented by the network of legal service providers and housing counselors funded under the Homeowner Protection Program (HOPP) created by Attorney General Schneiderman in June 2012. Using a portion of the funds New York State received under the terms of the National Mortgage Settlement, the Attorney General committed $60 million over three years to 35 legal services organizations and 59 housing counseling agencies statewide.

Preliminary Statement from the AG’s Motion to Enforce the Consent Judgment:

PRELIMINARY STATEMENT
NYAG asks this Court to compel Wells Fargo to honor the terms of the bargain it struck
just over a year ago, when it entered into the consent judgment commonly known as the
“National Mortgage Settlement” (“NMS”). The National Mortgage Settlement was meant to put
an end to a broad pattern of residential mortgage servicing abuses engaged in by Wells Fargo and
other major mortgage servicing banks. These abuses included the rote and automatic signing of
legal documents in hundreds of thousands of foreclosure proceedings across the country, known
as “robo-signing,” and a pattern of obstructive practices designed to avoid reasonable
modifications to loan terms by burying homeowners in paperwork and besieging them with
bureaucratic delays and dead ends. Under the NMS, state and federal regulators released claims
against the banks for their broad and extensive abuses in exchange for, among other things, the
banks’ agreement to comply with highly specific servicing standards designed to make loan
modifications available to distressed homeowners through a swift and streamlined process.
The declarations submitted with this application, describing the experiences of 97 New
York homeowners, show that Wells Fargo has not abided by its agreement. The Bank has
engaged in widespread breaches of its most basic obligations under the consent judgment that
have harmed and continue to harm thousands of New York families. Indeed, within the last few
months, the Monitor of the consent judgment announced that Wells Fargo had repeatedly failed
to comply with a key timing provision of the 2012 settlement.

The Bank has continued to subject homeowners to Kafkaesque delays and obstructions in
the loan modification process. The documents submitted herein show that the Bank made
repeated demands that one homeowner provide additional information in support of his
application for a loan modification over the course of a seven-month period. Most of the
information required from the homeowner by the Bank had either been provided with the initial
submission (such as the homeowner’s tax return for 2011) or related to trivial matters that could
have no impact on the decision whether or not to grant a loan modification (such as the demand
for a “letter of explanation” concerning a $2 amount listed on one paystub). Many New York
homeowners were similarly required by the Bank to retrieve and resubmit documents that they
had already provided with their original applications months earlier. Often, the Bank’s demands
for documents were cryptic and confusing, if not entirely unintelligible to the average
homeowner.
The Bank has also subjected homeowners to repetitive and wasteful court appearances
and provided them contradictory and inaccurate information. These abuses and delays have led
to more than frustration for homeowners; they have caused the fees and interest owed by
homeowners to grow, making it harder by the day for the homeowners to obtain modifications
that would allow them to become current on their loans and avoid foreclosures.
In order to put an end to the Bank’s continued defiance of the consent judgment, NYAG
respectfully requests that the Court order that: (1) the Bank comply with the NMS requirements;
(2) the Bank take such additional steps as are necessary to ensure compliance with the loan
modification timelines; (3) the Bank provide relief from foreclosure for New York borrowers
harmed by the Bank’s breaches of the NMS; (4) the Bank provide relief from assessments due to
the Bank’s violations of the rights of New York borrowers; and (5) the Bank provide such other
equitable relief as the Court may deem just and proper.

Does Wells Fargo’s conduct sound familiar to anyone?

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