Less than three weeks after New York Attorney General Eric Schneiderman announced his intention to sue five U.S. banks for violating the terms of last year's National Mortgage Settlement, he reportedly wrote a letter to former North Carolina Banking Commissioner Joseph Smith, the monitor for the settlement, stating that there was ‘mounting evidence’ that some of those banks continued to violate the terms of the settlement after it was signed.
The settlement requires the banks to improve their customer service practices by complying with new mortgage servicing rules, including setting a timeline for processing mortgage modification applications.
In a statement, Schneiderman claims his office has documented 339 violations of the imposed servicing standards by Wells Fargo and Bank of America since October 2012.
‘Several other states have identified similar recurring deficiencies by the participating servicers,’ Schneiderman said in his May 23 letter to Smith, according to a Reuters report.
The $25 billion settlement brokered last year between the banks and 49 state attorneys general also includes JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc. In effect, it forces them to comply with the new servicing standards to atone for their misconduct, or face additional lawsuits.
According to the Reuters report, Schneiderman did not identify which other states had provided evidence of banks failing to abide by the new servicing rules – nor did he name the banks which had failed to comply.
Smith will first work with the mortgage servicers to correct any potential violations. If a servicer continues to fail to comply, it could face additional litigation.
