Nov 16 New York Attorney General Eric Schneiderman on Friday warned Wells Fargo & Co that the U.S. bank's policy to delay mortgage modification decisions in states affected by Hurricane Sandy likely violates a national mortgage settlement.
Schneiderman said his office has been contacted by lawyers representing homeowners in New York who have been notified by the bank that it's suspending decisions on loan modifications until it receives information from the Federal Emergency Management Agency.
Under a $25 billion settlement reached in February, Wells Fargo and four other banks agreed to new loan servicing standards, including a requirement to make decisions on loan modification requests within 30 days of receiving a completed application. Loan modifications typically reduce monthly payments for borrowers in danger of foreclosure.
"Wells Fargo is not excused from any of its obligations under the National Mortgage Settlement or under New York law as a result of Hurricane Sandy," Schneiderman wrote in a letter to the bank. "My office will aggressively pursue any loan servicing company that uses this tragic event as an excuse to violate loss mitigation decision timelines."
Wells Fargo spokeswoman Vickee Adams said there is a "misunderstanding" over the bank's policy.
"We are here to do what we can for our customers," she said. "We are here to help them."
Wells Fargo began suspending all foreclosures in FEMA declared disaster areas immediately after Sandy made landfall, Adams said. The suspension will last at least 90 days for loans owned by the bank. Loans serviced for others will follow investor guidelines.
Adams declined to comment further on how the bank is handling the timing of loan modification decisions.