Two huge settlements with the biggest U.S. banks — dubbed the National Mortgage Settlement and the Independent Foreclosure Review — involved millions of wronged homeowners thrust into foreclosure. But that’s not enough to convince Wall Street Journal editorial board member Mary Kissel.
New York’s attorney general said he is suing Wells Fargo to get the nation’s largest mortgage lender to comply with new servicing standards under last year’s five-bank settlement spurred by foreclosure-related abuses. Meanwhile, Attorney General Eric T. Schneiderman said today that his office has reached an agreement to suspend a similar enforcement action against Bank of America.
According to the data provided, 643,726 borrowers have seen some type of mortgage relief or other assistance, such as expedited short sales or limited mortgage principal forgiveness. Many are in first-lien trial modifications.
Sen. Elizabeth Warren, D-Massachusetts, on Wednesday asked the U.S. Department of Justice to explain how the five big banks under the National Mortgage Settlement were able to circumvent claims that they defrauded the Federal Housing Administration with only a $225 million payment.
The nation’s second-largest bank is fighting headline-grabbing lawsuits alleging misdeeds in helping homeowners avoid foreclosure, but even litigation costs haven’t kept Bank of America from reaping a big profit in the second quarter.
The state and federal overseers of the National Mortgage Settlement, known as the Monitoring Committee, have declined to take additional enforcement action against Bank of America and Wells Fargo, rejecting a request by New York Attorney General Eric Schneiderman to apply expanded civil penalties for servicing violations.
The nation’s top housing official said more banks in coming weeks will join the original five as part of the historic settlement. In another development, talks are underway to strengthen new rules against “dual tracking” — the practice of foreclosing on homeowners who are trying to negotiate a mortgage reduction plan.
In contrast to persistent loan-servicing complaints heard from homeowner advocates and state attorneys general, the government-appointed “monitor” over the National Mortgage Settlement found few violations among the five big banks, essentially giving them passing grades.
At least one lawmaker wants a government watchdog to investigate the mortgage-modification practices of Bank of America, in the wake of headline-grabbing allegations that the nation’s second-largest bank lied to homeowners as part of a strategy to push them into foreclosure or a more profitable in-house refinance product.
The practice known as ‘dual tracking’ — when a lender moves ahead with foreclosure as it negotiates a loan modification with the same homeowner – persists among the big banks under the National Mortgage Settlement.