Eric T. Schneiderman, New York State Attorney General, told Wells Fargo Bank today that it could not use Hurricane Sandy to excuse itself "from any of its obligations under the National Mortgage Settlement or under New York law."  The warning came after Schneiderman received word the bank had temporarily suspended review of and decisions on applications from homeowners throughout the Northeast for mortgage relief "in order to await further instructions from FEMA." 

In a letter sent today to John G. Stumpf, Wells Fargo's Chairman, President and CEO, the Attorney General told the bank it must reverse its new policy where it affects applications from New York homeowners "many of whom are still struggling to recover in the aftermath of Hurricane Sandy."  Schneiderman said the bank's directive likely violates the terms of the National Mortgage Settlement which Wells Fargo and four other major banks made with 49 State Attorneys General and the Department of Justice.  The settlement mandates lender compliance with a number of servicing reforms, including swift review and response timelines for borrowers seeking mortgage modifications and other forms of relief.

Schneiderman's letter said in part, "I am certain that you are aware that under the National Mortgage Settlement, as well as under pre-existing NY State law, Wells Fargo is required to adhere to strict timelines when evaluating a homeowner's request for a loan modification. Specifically, Wells Fargo is required to make a decision about a homeowner's loan modification request within 30 days of receiving a completed application package. Wells Fargo's decision to delay review will likely result in multiple violations of the National Mortgage Settlement."

He further demanded immediate confirmation that Wells Fargo will rescind its policy and that Strumpf and his legal representatives will take all necessary steps to communicate a retraction to homeowners who may have been improperly denied foreclosure mitigation assistance.

Schneiderman said that his office had been contacted by a number of legal service providers assisting New York State homeowners who had received a letter from a law firm representing Wells Fargo announcing the suspension and saying it would not respond to requests for mortgage relief until the bank receives further information from FEMA.  It is unclear why the bank felt it needed information from FEMA nor any statement from Wells Fargo as to what exactly is was seeking  

"Wells Fargo is not excused from any of its obligations under the National Mortgage Settlement or under New York law as a result of Hurricane Sandy," he wrote.  "My office will aggressively pursue any loan servicing company that uses this tragic event as an excuse to violate loss mitigation decision timelines."