BofA Says N.Y. Can’t Take Foreclosure Enforcement ActionDavid McLaughlin
Bank of America Corp. said New York Attorney General Eric Schneiderman has no right to take enforcement action against the bank over claims that it violated terms of a nationwide foreclosure settlement.
Enforcement actions are permitted under the agreement only when a bank fails to comply with defined metrics and an opportunity to cure the violation has been provided, the bank said in a May 7 letter to Schneiderman. The bank says it has complied with “every applicable metric.”
“Your office has no right under the express terms of the national mortgage settlement to commence an enforcement action against Bank of America, and we respectfully request that your notice of intent to do so be publicly withdrawn,” attorneys for the bank said.
The letter came a day after Schneiderman announced that Bank of America and Wells Fargo & Co. violated terms of last year’s settlement with five banks that resolved claims over their foreclosure practices. The deal was negotiated with 49 states and the U.S.
Schneiderman said he intended to sue the two lenders, claiming they “flagrantly violated” obligations for processing mortgage modification applications from homeowners. The $25 billion settlement set standards for servicing mortgage loans and provided monetary relief to homeowners.
Bank of America spokesman Lawrence Grayson declined to comment about the letter.
The Charlotte, North Carolina-based lender said it has been in “near-constant dialogue” with the attorney general’s office about complaints and has resolved or is working through all the complaints received from the office.
“Bank of America stands ready and eager to learn of the bases for the charges you have made, to remediate any mistake that may have occurred and, at the same time, to demonstrate that the generalized allegations of ‘flagrant violations’ and the like that have been made are entirely baseless,” the bank lawyers wrote.
According to Schneiderman, any party to the settlement may bring an enforcement action in federal court in Washington after notifying a monitoring committee set up to enforce terms of the deal. The committee is made up of state attorneys general, a state banking regulator, the Justice Department and the U.S. Department of Housing and Urban Development, and it is co-headed by Iowa Attorney General Tom Miller and HUD, according to Geoff Greenwood, a spokesman for Miller.
During a 21-day period following Schneiderman’s notice, the committee can choose to pursue a case. If it defers, New York can sue after waiting an additional 21 days, Schneiderman said. The attorney general said he seeks to require the banks to comply with the agreement.
“At least Bank of America will respond to one New Yorker promptly,” Damien LaVera, a spokesman for Schneiderman, said in an e-mailed statement. “As our letter to the monitor makes clear, we have the right to bring a suit against parties that violate the servicing standards and will do so.”
Greenwood declined to comment on whether the agreement permits Schneiderman to sue after the waiting period. Laura Brewer, a spokesman for the settlement’s monitor, Joseph Smith, said Smith declined to comment.
According to the settlement terms, a “potential violation” occurs if a bank exceeds a threshold error rate for a metric. A bank then has the right to cure the problem with a corrective action plan approved by the monitor.
Bank of America said it hasn’t committed any potential violations of the servicing standards. Only a failure to comply with the metrics can give rise to a lawsuit, “and even then only after an opportunity to cure has been provided,” it said.