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NY AG Alleges Servicing Violations, Threatens to Sue BofA, Wells Fargo

""New York Attorney General Eric T. Schneiderman"":http://www.ag.ny.gov/ revealed plans Monday to take legal action against Bank of America and Wells Fargo for allegedly violating terms under the national mortgage settlement ""reached"":http://dsnews.comarticles/robo-signing-settlement-finalized-2012-02-09 in February 2012.

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Schneiderman's office is accusing the banks of 339 servicing violations related to the timeline for processing mortgage modifications.

More specifically, the office named four servicing standards mandated under the settlement that the banks allegedly violated, one of which requires the servicer to make a loan modification decision within 30 days of receiving a complete mod application. Another requirement allows the borrower 30 days to submit missing documents or correct issues found in the loan modification application. Borrowers must also receive written acknowledgement regarding receipt of a loan modification application within three business days, and servicers must notify borrowers of all missing documents in the submitted mod application within five business days of receipt.

Last year, federal and state officials negotiated a landmark $25 billion mortgage settlement with the two banks and three other large servicers--JPMorgan Chase, Citigroup, and Ally Financial.

""The five mortgage servicers that signed the National Mortgage Settlement are legally required to take specific, rigorous, and enforceable steps to protect homeowners,"" Schneiderman said in a release. ""Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure. I intend to use every tool available to my office to hold these companies accountable under the terms of the National Mortgage Settlement.""

The AG's office also revealed Schneiderman sent a ""letter"":http://www.ag.ny.gov/pdfs/Letter%20to%20Monitoring%20Committee%20NYS%20AG%205%206%2013.pdf last week to the settlement monitor Joseph Smith and to each member of the Monitoring Committee, notifying them of his intention to sue the banks if the committee does not act. According to a release from the office, Schneiderman plans to ask the court to impose injunctive relief and to require strict compliance under the mortgage settlement.

Bank of America issued a statement in response to Schneiderman's intent to sue.

""Through March we have provided relief for more than 10,000 New York homeowners through the National Mortgage Settlement, totaling more than $1 billion. Attorney General Schneiderman has referenced 129 customer servicing problems which we take seriously and will work quickly to address. This agreement has been good for New York, and we continue using these beneficial programs to assist troubled homeowners in New York and nationally,"" a BofA spokesperson stated in an email.

A Wells Fargo spokesperson said the bank did not have a comment at the time of publication.

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