By Rich Bockmann
As Queens homeowners continue to struggle with the foreclosure crisis, state Attorney General Eric Schneiderman announced earlier this week his office intends to sue Wells Fargo and Bank of America, claiming the banking giants have violated the terms of a national agreement setting timelines for processing load modifications.
But in the state where the foreclosure process takes the longest amount of time, the potential legal action could make the process tougher for struggling homeowners.
The number of delinquency notices filed against Queens homeowners has climbed over the last year, according to market analysts, shooting up to more than 1,000 during 2013’s first quarter. Industry experts have said the numbers were artificially lowered after the state implemented stricter filing rules late in 2010 in order to combat the robo-signing crisis.
In 2012, Schneiderman — along with 48 other attorneys general and the U.S. Department of Justice — reached an agreement with the country’s five largest mortgage servicers, requiring them to comply with 304 servicing standards intended to make it easier for homeowners to get loan modifications.
Instead of dragging the banks into lengthy court battles, the idea was to get immediate relief for struggling homeowners.
But on Monday, Schneiderman announced that since October his office has documented 339 violations of four of the settlement’s standards by Wells Fargo and Bank of America, and in a letter dated April 29 he informed the agreement’s monitoring committee of his intent to sue, requesting a notice within 21 days on whether or not the committee would take any kind of enforcement action against the lenders.
Schneiderman would be the first to sue the banks for noncompliance with the agreement.
“The five mortgage servicers that signed the National Mortgage Settlement are legally required to take specific, rigorous, and enforceable steps to protect homeowners,” Schneiderman wrote in a statement. “Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure. I intend to use every tool available to my office to hold these companies accountable under the terms of the National Mortgage Settlement.”
But New York homeowners already have the longest average time for a foreclosure.
Across the country it takes, on average, fewer than 16 months to complete a foreclosure action. In the Empire State, it takes almost three years, and during that time borrowers can incur thousands of dollars in fees and arrears that can make it impossible for them to stay in their homes.
Daren Blomquist, vice president of the industry-monitoring website RealtyTrac, said he was surprised to see so many complaints about the time it takes to get a loan modification in the state where it takes the longest to foreclose on a home.
“On the macro-market side we’re seeing that because of the lengthy foreclosure process we’re seeing big increases in foreclosures. Most other states are past that point,” he said. “This kind of suit can only make the [foreclosure] process even longer, from a purely macro-market perspective.”
Reach reporter Rich Bockmann by e-mail at rbockmann@cnglocal.com or by phone at 718-260-4574.
