New York AG indicates Feds might ‘go after’ banks on mortgage settlement

Updated
New York Attorney General Eric Schneiderman speaks during a news conference at the Justice Department on January 27, 2012, in Washington, DC. Attorney...
New York Attorney General Eric Schneiderman speaks during a news conference at the Justice Department on January 27, 2012, in Washington, DC. Attorney...
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New York Attorney General Eric Schneiderman said Monday night that he suspected “you should see something soon” from the Department of Justice regarding legal action against major banks involved in a multibillion-dollar foreclosure settlement. Earlier that day, he had announced that he was suing two of those banks, Wells Fargo and Bank of America.

“We filed several major lawsuits against them,” Schneiderman said on msnbc’s All In with Chris Hayes. “The SEC has filed actions. The Department of Justice will be following along.”

When asked to clarify, he added, “I think you should expect to see something soon from DOJ,” leaving it unclear what action they would take or whether he could be certain.

Monday afternoon, Schneiderman accused Bank of America and Wells Fargo of violating the Servicing Standards of the National Mortgage Settlement, a $26 billion deal negotiated with five of the country’s biggest banks by 49 of the country’s 50 state attorneys general. The settlement was intended to provide an avenue for as many as one million homeowners to reduce their mortgage debt.

The Servicing Standards, rules the banks were required to follow so that it would be easier for underwater homeowners to obtain loan modifications, included a time limit on how long banks could take to consider applications and a prohibition on “dual tracking,” or bringing foreclosure proceedings while simultaneously considering a loan modification application. Schneiderman has said they had received 339 complaints saying that Wells Fargo and Bank of America alone had violated those standards in the past six months.

Those violations are “merely a sample of what is potentially a much larger pattern of non-compliance,” according to a letter [PDF] Schneiderman sent to the other state attorneys general on the settlement’s Monitoring Committee.

New York AG indicates Feds might 'go after' banks on mortgage settlement

Updated