By Karen Freifeld
NEW YORK May 24 New York Attorney General Eric
Schneiderman said there is mounting evidence that Bank of
America Corp, Wells Fargo and Co and other banks
violated the terms of a settlement designed to end mortgage
Schneiderman - who has said he plans to sue Bank of America
and Wells Fargo for failing to live up to their obligations
under the deal - said other states had found similar problems.
"Several other states have identified similar recurring
deficiencies by the participating servicers," Schneiderman said
in a letter dated May 23 to the monitor for the settlement,
former North Carolina Banking Commissioner Joseph Smith. The
letter was obtained by Reuters on Friday.
The $25 billion settlement was brokered last year between
five banks and 49 state attorneys general. The other banks are
JPMorgan Chase & Co, Citigroup Inc, and Ally
Financial Inc. The banks agreed to provide relief to
homeowners and comply with a set of servicing standards to atone
for foreclosure misconduct.
In his letter, Schneiderman did not identify which other
states had provided evidence of banks failing to abide by the
settlement. Nor did he identify the banks with recurring
He said receipt of his letter to Smith and a concurrent one
to a monitoring committee would start the clock on a waiting
period before lawsuits could be filed against the banks. The
settlement authorizes the monitor to first work with a mortgage
servicer to correct any potential violations and sue if the
servicer does not fix the errors.
Schneiderman said on May 6 he planned to sue Bank of America
and Wells Fargo after the waiting period was over, although he
did not mention the possibility of a lawsuit in Thursday's
At the time, Schneiderman said that, since last October, his
office had documented 339 violations of standards - 210 by Wells
Fargo and 129 by Bank of America - dictating the timeline for
banks to process mortgage modification applications.
In Thursday's letter, Schneiderman said the violations
reveal the two banks "are engaging in much of the same
misconduct that precipitated the National Mortgage Settlement."
Smith said in a statement Friday he would review the
violations Schneiderman shared. He also said he will issue a
report on the banks' compliance in June. "I intend to use the
full breadth of my power under the settlement to hold the banks
accountable," he said.
North Carolina Attorney General Roy Cooper, who is on the
monitoring committee, said in a conference call on Tuesday that
some banks have "fallen short" of complying with servicing
standards. He did not name any banks.
In Thursday's letter, Schneiderman said there had been
"inordinate delays" in reviewing loan modification applications
at Wells Fargo, so applicants had to resubmit documents.
He cited evidence of piecemeal requests for additional
documents in one modification application at Bank of America,
and said more than three months passed without a request for
more information or a decision on another application.
Bank of America has said it did not commit any violations,
and that it has provided more relief under the settlement than
any other servicer. Wells Fargo has said it was committed to
abiding by the settlement.
Citibank said on Friday it remains committed to fulfilling
the terms of the settlement. JPMorgan spokesman Tom Kelly
declined to comment. Ally said its bankrupt mortgage subsidiary
Residential Capital is responsible for the settlement. A
spokesperson for ResCap could not immediately be reached for
On Tuesday, Smith reported that the five banks in the
settlement had distributed $50 billion in direct relief to over
620,000 homeowners as part of the settlement.