New York State Attorney General: Why Banks Dropped The Ball on Loan Modification Applications

According to the New York State Attorney General's office, many banks have dropped the ball when it comes to loan modification applications. In fact, the New York State Attorney General's office has recently announced that they have plans to sute Bank of America and Wells Fargo for violating the terms of a whopping $26 million mortgage settlement.

Attorney Genreal Eric Schneiderman stated that banks have clearly failed to follow the rules and comply with a 2012 settlement in which the five largest mortgage servicing banks were instructed to comply with rules for processing loan modifications.

Schneiderman he has documented 339 violations of the rules by Bank of America and Wells Fargo since October of 2012. Schneiderman also highlighted the fact that banks failed to acknowledge even receiving loan modification applications within three business days, they also failed to tell homeowners they were missing any documentation in their application, they refused to give borrowers enough time with deficiencies in their applications, and completely dropped the ball on taking action on loan modification requests within 30 days.

These delays cost homeowners additional fees and interest and huge risk of foreclosure.

“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 statement. “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.”

Schneiderman said taking this issue to court will happen, unless a monitoring committee is in place to enforce the rules takes action against the banks.