The attorney general of New York said that he has plans about suing the major lenders that are Wells Fargo and Bank of America for violating mortgage settlement of $25bn.
Eric Schneiderman stated that the two hadn’t adequately made sure to help in protecting homeowners.
Five of the US lenders agreed that the National Mortgage Settlement last year with the authorities was designed for reshaping the practices of lending following collapse of housing market of US.
Bank of America said that it would quickly work to address the problems.
In one statement, the bank told, “Through March we have provided relief for more than 10,000 New York homeowners through the National Mortgage Settlement, totalling more than $1bn.
“Attorney General Schneiderman has referenced 129 customer servicing problems which we take seriously and will work quickly to address.”
On this, Wells Fargo did not comment.
As a part of deal, the banks had to provide to the homeowners relief, who were at the risk of their homes’ losing, and also provide compensation for the homeowners who had their homes foreclosed.
Meghan Faux, the legal services’Acting director in Brooklyn, NYC, said, “Through March we have provided relief for more than 10,000 New York homeowners through the National Mortgage Settlement, totalling more than $1bn.”
Mr Schneiderman said that his office documented many instances when Bank of America and Wells Fargo failed in processing requests for refinancing from the holders of mortgage fast enough, and so putting them at huge risk of being foreclosed.
JP Morgan Chase, Citibank and Ally Financial/GMAC are covered by this settlement also but they weren’t blamed by attorney general for violations.
Mr Schneiderman is reported to have said, “The five mortgage servicers that signed the National Mortgage Settlement are legally required to take specific, rigorous, and enforceable steps to protect homeowners.
“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure.
“I intend to use every tool available to my office to hold these companies accountable under the terms of the National Mortgage Settlement.”
He said that he had told official committee that is in charge about monitoring mortgage settlement regarding the intention he had to sue.
Now the committee has twenty-one days to think whether the case should be pursued under the committee’s own authority.
Speaking during press conference in the city of New York, Meghan Faux, the legal services’ acting director in Brooklyn, says, “What’s clear to us is that the foreclosure crisis in New York is far from over.
“It takes us six to eight court appearances over two years to get one homeowner a loan modification.”
A customer at Wells Fargo, the homeowner Joyce Harden, said that her husband and she herself have tried to get loan modification from four years. The bank was also “doing the same thing” in Florida to the woman’s daughter.
The co-director of Neighborhood Economic Development Advocacy Project, Josh Zinner, said that the frustration level was sever in homeowners.
“These are not just technicalities,” he said and added that it was a “Kafkaesque experience for many”.
The Legacy Of Bad Loans
This case happens to indicate how the crisis of subprime mortgage still continues to trouble the lenders of US for five years.
In some separate development, the Bank of America announced earlier that it did reach over settlement with the insurer of mortgage MBIA in a clash regarding mortgage securities that were issued during housing boom.
Big losses were suffered by MBAI when there was crash of the housing market, and damages have been sought after from Bank of America.
Now Bank of America says that it’ll pay $1.6bn cash to MBIA, together with any other compensation, provide insurer with $500m credit line and also take 4.9% stake in the holding company of MBIA.