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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: May 6, 2013

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Today, a state attorney general announced his plan to sue two large banks, claiming they violated terms of a mortgage loan settlement.

New York Attorney General Eric Schneiderman announced his intention to sue Bank of America and Wells Fargo over term violations of the National Mortgage Settlement. The 2012 settlement, worth an estimated $25 billion, required the top five mortgage loan servicing banks to improve their customer service practices and comply with new servicing standards.

The original settlement came from a large-scale investigation throughout the country over mortgage loan servicing errors. The settlement found that the top five banks evicted homeowners using incomplete or incorrect documentation. The 2012 settlement’s terms aimed at providing relief for homeowners and slowing the housing market’s downturn by increasing bank’s servicing standards for mortgage loans.

The new servicing standards outlined in the settlement detail over 300 items that need to be followed when dealing with stressed homeowners. One of the standards involves giving a borrower a written confirmation of receipt of a loan modification application within three business days.

Schneiderman’s office found that out of the five main banks, Wells Fargo and Bank of America failed to uphold the settlement’s rules. Schneiderman documented 210 separate violations for Wells Fargo and 129 for Bank of America since October 2012.

Schneiderman is the first attorney general to sue over the National Mortgage Settlement.

In a released statement, Schneiderman said that the five mortgage servicers are legally required to take specific and enforceable steps to protect homeowners.

“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” he said.

He continued stating that he will hold both banks accountable under the terms of the National Mortgage Settlement.

Richard Simon, a Bank of America spokesperson, told loans.org that the 129 customer servicing problems referenced by Schneiderman are being taken seriously and will be addressed quickly.

“Through March we have provided relief for more than 10,000 New York homeowners through the National Mortgage Settlement, totaling more than $1 billion,” Simon said. “This agreement has been good for New York, and we continue using these beneficial programs to assist troubled homeowners in New York and nationally.”

Wells Fargo provided “no comment.”