New York Attorney General Eric T. Schneiderman is preparing to take Wells Fargo to court for disregarding the terms of 2012's multibillion-dollar settlement to end foreclosure abuses. The bank allegedly violated the agreement's guidelines, under which five major mortgage firms must comply with 304 servicing standards for fielding and processing requests from distressed homeowners.
In May, Schneiderman warned Bank of America and Wells Fargo that he had found violations of the mortgage settlement by both lenders. Although Wells Fargo is readying for a lawsuit, Bank of America is preparing to announce another layer of protections adopted after discussions with Schneiderman’s office, including an agreement to assign a “high-level” employee to respond to questions from housing counselors. Wells Fargo is also working with settlement monitor Joseph A. Smith on additional consumer safeguards. Sources say that one of Schneiderman’s complaints about Wells Fargo is that the bank refused to improve its processes in a formal agreement and that the New York AG’s office still receives more complaints about Wells Fargo’s servicing than for any other lender.