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Wells Fargo Sued For Violating Settlement

Wells Fargo sign Wells Fargo isn’t holding up its end of the bargain on last year’s National Mortgage Settlement, and New York State Attorney General Eric Schneiderman is making an example out of the bank.

Schneiderman is suing Wells Fargo for 210 separate violations involving 96 borrowers, saying that the mortgage behemoth still hasn’t taken the necessary steps to help troubled homeowners apply for modifications to their mortgages.

As a refresher on the settlement, five major banks and 49 states struck a $26 billion deal in February 2012.

The settlement’s goal was to provide some relief to borrowers in the form of debt forgiveness and lower-interest loans, righting the abusive practices — including “robo-signings” — which banks used to improperly foreclose on homes.

Of course, as soon as the deal came out, we had fears that it would do a lot more for the banks than for millions of families who have lost their homes or seen the value of their homes drop.

Even before 2012 was over, the banks were being accused of skimping on the mortgage settlement, using mostly short sales as relief instead of helping borrowers refinance into loans they could afford.

But it looks like the attorney general of New York is finally stepping in to make sure the money is spent properly.

In addition to Wells Fargo, Bank of America has been under the gun since May, when Schneiderman announced that he had found both banks in violation of the mortgage settlement terms.

Interestingly, Bank of America has supposedly already reached a new agreement with New York to correct its failure to follow the settlement.

Yet Wells Fargo, which made almost a quarter of U.S. home loans in the first quarter of this year, according to Mortgage News daily, has refused to settle.

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