New York Attorney General Eric Schneiderman on Monday said he plans to sue Bank of America Corp and Wells Fargo & Co. for violating the National Mortgage Settlement brokered last year between the country’s biggest banks and 49 state attorneys general.
Schneiderman said that since last October he has documented 339 violations of standards dictating the timeline for banks to process mortgage modification applications.
“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” the attorney general said in a statement.
Representatives of the banks did not immediately return calls seeking comment.
Schneiderman said he sent a letter to monitors for the National Mortgage Settlement informing them of his intent to sue the banks.
He said he would seek injunctive relief and an order requiring the banks to comply with the settlement.
Bank of America and Wells Fargo were among five banks that agreed to the $25 billion settlement in February 2012. The pact was supposed to curb abusive foreclosure practices and was expected to help roughly one million borrowers.
Schneiderman said his action would be the first law enforcement claim under the settlement. He said the agreement allows any party to bring action following a 21-day notice to the monitoring committee set up to enforce the agreement.
During the 21-day period, he said, the committee may chose to pursue the litigation under its own authority or may defer action. If the committee defers, he said, he is allowed to pursue the claim on his own after another 21 days.
The settlement released the banks from claims over faulty foreclosure practices and the mishandling of requests for loan modifications.
It was supposed to speed mortgage relief to homeowners in need and provide $2,000 payments to borrowers who lost their homes to foreclosure.
JPMorgan Chase & Co , Citigroup Inc and Ally Financial Inc were the other banks in the settlement.
Additional reporting by Aruna Viswanatha
Karen Freifeld