AG Warns Wells Fargo on Storm Foreclosures

MANHATTAN (CN) - Wells Fargo may be violating the terms of a recent foreclosure-abuse settlement at the expense of Hurricane Sandy victims, New York's attorney general said Friday.

Attorney General Eric Schneiderman addressed his two-page letter to Wells Fargo president John Stumpf, at his corporate offices in San Francisco.

He said that "a number of legal service providers" have reported that Wells Fargo plans to suspend "all Home Preservation reviews and decisions" in the wake of the storm, until the bank receives guidance from the Federal Emergency Management Agency.

Schneiderman warned Stumpf that this position violates a national mortgage settlement Wells Fargo signed in March.

"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," the letter states. "Wells Fargo's decision to delay review will likely result in multiple violations of the National Mortgage settlement.

"Please be advised that 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, and that my office will aggressively pursue any loan servicing company that uses this tragic event as an excuse to violate loss mitigation decision timelines."

Schneiderman told Wells Fargo to immediately drop this policy and contact homeowners who may have been affected.

"Countless families in New York have suffered tremendously because of this natural disaster," the letter states. "As we work to help those affected rebuild their lives, my office expects Wells Fargo's full cooperation in ensuring that no additional and unwarranted damage is inflicted on those who were victims of this tragic event."

Wells Fargo spokeswoman Vickee Adams insisted that the bank's policy change would not adversely affect hurricane victims.

"Wells Fargo began suspending all foreclosures sales in FEMA declared disaster areas immediately after Sandy made landfall, over two weeks ago," Adams told Courthouse News in an email. "These suspensions and any foreclosure activity will last a minimum of 90 days for the loans Wells Fargo owns which the company also services. Loans serviced for others including FNMA / FRE and GNMA will follow specific investor guidelines.

"All eviction actions in FEMA declared disaster areas were also suspended," she added. "This policy will be reviewed again in January 2013."

Adams did not directly comment on how Wells Fargo responded to Schneiderman's letter.

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