New York's Attorney General has issued a letter demanding that Wells Fargo resume processing mortgage modification requests for borrowers in states hit by Hurricane Sandy. Wells Fargo, meanwhile, insists that the dust-up is a misunderstanding and that it has acted in hurricane-stricken borrowers’ best interests.
The bank has temporarily halted the reviews until it receives guidance from the Federal Emergency Management Agency, according to Attorney General Eric Schneiderman, though details of why Wells would have stopped processing are unclear.
In a letter to Wells Fargo Chief Executive John Stumpf, the AG called the bank's actions "unconscionable" and a repudiation of its promise to promptly review modification requests under the terms of the National Mortgage Servicing Settlement.
"My office is requesting immediate confirmation that Wells Fargo will rescind this policy," 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."
The dustup started after consumer legal service providers contacted the AG's office about a letter from Wells Fargo's outside counsel stating that the bank intended to suspend all reviews and decisions on modifications in the wake of the hurricane.
Wells says the intent of the letter was to note that the storm had set back its modification reviews but reassure borrowers that they would not be harmed.
"We suspended foreclosure sales, stopped making new foreclosure referrals, and stopped evictions when the storm made landfall," bank spokeswoman Vickee Adams says. "Unfortunately it appears that there's a significant misunderstanding."
Wells has made other hurricane-related adjustments to its retail banking business, all of which to date were beneficial to consumers. Following Sandy, the company suspended overdraft and late fees for customers in affected areas, donated $1 million to relief efforts, and used its nationwide ATM network to solicit donations from its customers.
Wells is one of five large mortgage servicers subject to a $25 billion settlement with 49 state attorneys general stemming from the so-called robo-signing of foreclosure documents.
Under the pact, JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Ally Financial have three years to provide $25 billion of relief to borrowers in the form of principal reductions, short sales, second-lien forgiveness and refinancings.
Wells is the nation’s largest residential servicer with $1.86 trillion of housing receivables on its books, according to figures compiled by National Mortgage News and the Quarterly Data Report.
Wells, B of A and JPM have a combined servicing market share of 49%.