Wells Fargo shirked terms of mortgage deal: NY AG

October 02, 2013 12:27PM

New York State Attorney General Eric Schneiderman is taking Wells Fargo to court to force it to comply with last year’s national mortgage case settlement.

The settlement, which resolved litigation over allegedly improper lending practices, banned banks from moving forward with foreclosures while negotiating loan modifications. Schneiderman’s actions imply that Wells Fargo wasn’t keeping up its end of the bargain, but the bank maintained in a statement that it had followed the terms of the deal.

Schneiderman also announced that he was dropping a similar suit against Bank of America, which has agreed to reforms of its lending system, Crain’s reported.

“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,” Schneiderman said in a statement. “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.”

Bank of America said in a statement that it was happy to resolve the case.

The standards, sanctioned by New York and 48 other states, require the banks to acknowledge refinancing applications in writing within three business days, notify borrowers of missing documents within five days and make decisions on complete applications within 30 days.

On Monday, Wells Fargo said that it would pay Freddie Mac $780 million to settle claims that it sold the government-backed entity bad home loans in the leadup to the housing crash. [Crain’s]  – Hiten Samtani