New York AG To File Lawsuit Against Wells Fargo

Posted by Patrick Barnard on October 02, 2013 No Comments
Categories : Mortgage Servicing

New York Attorney General Eric Schneiderman is expected to file a lawsuit this week against Wells Fargo, accusing the bank of violating the terms of last year's National Mortgage Settlement.

The news comes just days after Wells Fargo agreed to pay $869 million to government-sponsored enterprise (GSE) Freddie Mac to settle disputes over faulty mortgages the bank sold to the firm prior to Jan. 1, 2009.

According to a New York Times report, Schneiderman may file the suit as early as Wednesday.

The AG alleges Wells Fargo failed to comply with some of the 304 servicing standards stipulated under the agreement reached last year between five of the nation's largest banks and 49 state attorneys general. The complaint pertains to how the banks handle the servicing of mortgages – in particular, the servicing of delinquent or defaulted loans.

Since the settlement terms went into effect, the AG's office has reportedly fielded hundreds of complaints from struggling borrowers who have had difficulty working with servicers to arrive at solutions to save their homes.

Vickee J. Adams, a spokeswoman for Wells Fargo, told the New York Times that the bank had not yet been served with a copy of the lawsuit.

‘It is very disappointing that the New York attorney general continues to pursue his course, given our commitment to the terms of the National Mortgage Settlement and ongoing engagement,’ Adams told the paper. ‘Wells Fargo has been a leader in preventing foreclosures, helping families maintain homeownership with more than 880,000 modifications nationwide and 26,000 in New York over the last four years.’

In May, Schneiderman's office announced that the AG was mulling suits against Bank of America and Wells Fargo over violations of the terms of the mortgage settlement. That prompted negotiations between the AG's office and the two banks.

As a result of those talks, Bank of America has reportedly agreed to implement additional measures to ensure it is in compliance with the settlement – while Wells Fargo has maintained that it has not violated the agreement and is prepared to fight the suit in court.

After Schneiderman announced his intention to sue, he reportedly wrote a letter to former North Carolina Banking Commissioner Joseph Smith, the monitor for the settlement, stating that there was ‘mounting evidence’ that Wells Fargo and Bank of America had continued to violate the terms of the settlement. More specifically, Schneiderman said his office had documented 339 violations of the imposed servicing standards by Wells Fargo and Bank of America since October 2012.

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