New York's top prosecutor said Wednesday he would file suit against Wells Fargo for failing to live up to a 2012 agreement meant to resolve foreclosure abuses.
"The attorney general gave ample time to Wells Fargo to agree to ... reforms, but after months of negotiations, the bank declined to sign any agreement aimed at improving its customer service practices," Attorney General Eric Schneiderman's office said.
The reforms Schneiderman was seeking were steps Wells Fargo needed to take to comply with the multibillion-dollar 2012 National Mortgage Settlement, which involved five financial firms charged with
cheating homeowners of due process while attempting to deal with massive numbers of foreclosures that were the direct result of the economic downturn.
Schneiderman warned in May that Bank of America and Wells Fargo were at risk of facing a lawsuit if they did not revamp their efforts to comply with the settlement.
The warning was not aimed at Ally Financial/GMAC, JPMorgan Chase or Citibank, the other firms that were part of the 2012 settlement.
Schneiderman said Wednesday he would give Bank of America another 120 days to bring itself into compliance. For the moment, BofA had agreed to "a robust set of systemic reforms" that would enable it to avoid a lawsuit, Schneiderman said.
Specifically, Bank of America has agreed to steps that include assigning high level staff members to address issues that might be slowing loan modification requests, redesigning a "missing documents" letter to make it clearer to consumers and to stop moving loans over to third parties on New York mortgages "when borrowers are already in negotiations for a loan modification with Bank of America staff."
In another switch, Bank of America agreed to allow borrower's attorneys to negotiate directly with Bank of America staff, rather than having loan modifications referred by the bank to contracted lawyers "who typically are far removed from the loan modification and loss mitigation process."
On the other hand, Wells Fargo, "has taken a different path," Schneiderman's office said in a statement.
"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.
"Too many Wells Fargo customers still navigate months of needless delay," said Meghan Faux of South Brooklyn Legal Services.