Huffpost Business

Wells Fargo Sandy Mortgage Delays May Violate National Mortgage Settlement, New York AG Warns

Posted: Updated:
WELLS FARGO SANDY MORTGAGE DELAYS
Getty Images


* Delays may violate mortgage settlement - attorney general

* Bank says actions misinterpreted, it is helping customers

By Rick Rothacker

Nov 16 (Reuters) - New York Attorney General Eric Schneiderman on Friday warned Wells Fargo & Co that the U.S. bank's policy to delay mortgage modification decisions in states affected by Hurricane Sandy likely violates a national mortgage settlement.

But the No. 4 U.S bank by assets said its actions were being misinterpreted and that it was simply taking steps to make sure customers received the help they needed.

Schneiderman said his office has been contacted by lawyers representing homeowners in New York who have been notified by the bank that it is suspending decisions on loan modifications until it receives information from the Federal Emergency Management Agency.

Under a $25 billion settlement reached in February, Wells Fargo and four other banks agreed to new loan servicing standards, including a requirement to make decisions on loan modification requests within 30 days of receiving a completed application. Loan modifications typically reduce monthly payments for borrowers in danger of foreclosure.

"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 in a letter to the bank. "My office will aggressively pursue any loan servicing company that uses this tragic event as an excuse to violate loss mitigation decision timelines."

Wells Fargo simply added a step of checking in with customers in hurricane-affected areas to make sure the information in their modification applications was still accurate, said Michael DeVito, the bank's head of mortgage default servicing, in an interview.

The bank is aware of the national mortgage standards and plans to comply with them, he said, adding: "Our first concern is to make sure these customers are getting the right relief, the full relief that's available to them."

Immediately after Sandy made landfall, Wells Fargo began suspending all foreclosures in FEMA declared disaster areas, the bank said. The suspension will last at least 90 days for loans owned by the bank. Loans serviced for others will follow investor guidelines.

Wells Fargo has scheduled a meeting with Schneiderman's office for next week, DeVito said.

"We'll continue to work...to clarify our actions and why we believe it's in the best interest of the constituents and customers in New York," he said.

Wells Fargo is the largest U.S. mortgage lender.

Also on HuffPost:

Close
Companies Helping Sandy Victims
of
Share
Tweet
Advertisement
Share this
close
Current Slide

Suggest a correction

Around the Web

New York warns Wells Fargo about Sandy mortgage delays - Yahoo ...

New York warns Wells Fargo about Sandy mortgage delays - One ...

New York AG Slams Wells Fargo on Sandy-Related Loan Mod Delays

NY AG Slams Wells Fargo on Sandy-Related Loan Mod Delays

Union sues National Grid over Hurricane Sandy-related overtime ...

New York warns Wells Fargo about Sandy mortgage delays

Banks, Lenders Extend Sandy Assistance to Homeowners

After Bailout, Giants Dominate the Mortgage Business

Sandy-Swamped New Jersey Leading Foreclosures: Mortgages