Florida readers may be interested to know that Wells Fargo is being sued in federal court by the New York attorney general for obstructing and delaying mortgage modification applications in violation of the $25 billion settlement made last year. It is also alleged that the bank violated the timelines imposed by the terms of the settlement approximately 210 times. The lawsuit requests that the federal court in Washington, D.C., force Wells Fargo to comply with the agreement.
The national mortgage settlement came out of an investigation into complaints that foreclosure paperwork was being robo-signed with no review of the client’s file. Banks agreed to the settlement to avoid any other legal action. As a result of the settlement, banks have three business days to acknowledge in writing that the modification requests were received. It then allows five days for the bank to notify applicants of missing documents. Applicants are then given 30 days to submit any missing materials. The banks agreed to make decisions on completed applications within 30 days.
However, the lawsuit has complaints attached from 97 individuals who claim that Wells Fargo failed to keep promises and missed deadlines. The paperwork goes on to describe a pattern of obstruction and unreasonable demands from the bank. For its part, Wells Fargo claims to have completed approximately 26,000 modifications in New York alone over the course of four years.
During the recession, many homeowners found themselves unable to make their mortgage payments. Some of the programs intended to help them have been beset with problems. If a homeowner is having an issue with delays in loan modifications, a bankruptcy attorney could review the situation. While filing bankruptcy won’t permanently stop a foreclosure, it may stall the proceedings long enough to allow the homeowner a chance to catch up on back payments.
Source: Los Angeles Times, “Wells Fargo is accused of bogging down mortgage modifications“, E. Scott Reckard and Andrew Tangel, October 02, 2013