New York AG Says Wells Fargo Policy 'Likely' Violates Settlement
By: Esther Cho
In a letter, New York Attorney General Eric T Schneiderman accused Wells Fargo of using Hurricane Sandy to evade obligations under the national mortgage settlement.
According to the AG’s letter, a law firm representing Wells Fargo released a letter stating the bank will suspend “all Home Preservation reviews and decisions” as a result of Hurricane Sandy. The AG says the letter from Wells Fargo further states the bank “will not respond to requests for mortgage relief until you receive further information from FEMA.” The letter applied to decisions in the Northeast.
“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. “My office will aggressively pursue any loan servicing company that uses this tragic event as an excuse to violate loss mitigation decision timelines.”
The $25 billion mortgage settlement was reached in February between state and federal officials and the five largest servicers—Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial.
As part of the settlement agreement, “Wells Fargo is required to make a decision about a homeowner’s loan modification request within 30 days of receiving a completed application package. Wells Fargo’s decision to delay review will likely result in multiple violations of the National Mortgage Settlement,” the AG’s letter stated.
In an email, a Wells Fargo spokesperson said, “It is extremely unfortunate that Wells Fargo’s actions would be interpreted in any way other than our sincere interest and concern for customers impacted by the storm and our effort to be certain that they get the full relief available to them.”
The spokesperson further explained, stating, “Just as we paused modification decisions, Wells Fargo began suspending all foreclosure sales in FEMA declared disaster areas immediately after Sandy made landfall, over two weeks ago. We also stopped new foreclosure referrals and suspended evictions immediately.”
The suspensions and any foreclosure activity will last a minimum of 90 days for Wells Fargo loans, according to the spokesperson.
The letter from the AG was addressed to the CEO of Wells Fargo and demands that the bank “immediately rescind” the policy and “comply with its obligations without interruption.”
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