Mortgage Fraud Settlement: “Buyer’s Regret”

(2 pm. – promoted by ek hornbeck)

Cross posted from The Stars Hollow Gazette

New York State Attorney General Eric Schneiderman announced that he plans to sue Wells Fargo and Bank of America over claims that they breached the terms of a multibillion-dollar settlement intended to end foreclosure abuses.

Under the terms of the settlement, banks have to abide by 304 servicing standards, like notifying homeowners of missing documents within five days of receiving a loan modification and providing borrowers with a single point of contact.

“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” Mr. Schneiderman said. Since October 2012, Mr. Schneiderman’s office has documented 210 separate violations involving Wells Fargo and 129 involving Bank of America.

Shahien Nasiripour reports at Huffington Post that it’s unclear if Mr. Schneiderman can do this:

The agreement does not specify whether he can independently pursue legal action against the banks without first allowing the Office of Mortgage Settlement Oversight, run by (Joseph) Smith, to determine whether they are complying, a process that could take months.

Smith’s office will make public by June 30 its first required report on the banks’ compliance with the mortgage servicing standards. The deal dictates that the companies shall have an opportunity to correct potential violations once they are identified. If the same violations continue, the monitoring committee could launch lawsuits and levy penalties totaling as much as $5 million for each violation.

But as attorney and writer Abigail Field notes at naked capitalism, it would seem that AG Schneiderman has a case of buyer’s remorse and examines why this lawsuit is a lashing with a wet noodle:

Now that that A.G. Schneiderman’s learned that Bank of America and Wells Fargo have failed to service 339 New Yorkers according to the standards dictated by the Settlement, he’s served notice he intends to sue. Not for money; for “equitable relief.” Though I’ve not seen a filing, I imagine if he actually will seek an injunction to get Wells and BofA to start complying with (specific performance of) the four servicing standards Schneiderman is targeting in his press release: [..]

The Bottom Line

It’s really hard to see how this effort-even if A.G. Schneiderman triumphs-leads to the kind of systemic change that was possible when all of the liability for the banks’ bad acts was still on the table. You know, pre-settlement, when A.G. Schneiderman and a few other Democratic A.G.s looked like they were going to stand up for America and insist on a meaningful deal.

Consider, the most that can come of this is two of the five banks complying completely with four of the 304 Servicing Standards.

AG Schneiderman joined MSNBC”S All In host Chris Hayes for an exclusive interview about why, after a multibillion dollar settlement, banks are still not living up to rules about mortgages and refinancing.

1 comment

  1. TMC

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