The hits keep coming for Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co. (NYSE:JPM) all of which are facing new legal and regulatory actions.
As has widely been reported the New York Attorney General intends to file suits against Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC) for alleged violations of the $26 billion foreclosure settlement reached in 2012. Meanwhile, JPMorgan Chase & Co. (NYSE:JPM) is under the microscope of the Office of the Comptroller of Currency over the big banks’ $6 billion+ synthetic credit swap blunder as well as the firms’ mishandling of the Madoff Ponzi caper in its capacity as trustee for the fraudsters’ bogus investment scheme.
New York Attorney General to Sue Bank of America and Wells Fargo
New York’s Attorney General Eric Schneiderman said this week that a lawsuit is in the works against Bank of America and Wells Fargo over alleged violations of the National Mortgage Settlement agreed to in 2012. The deal between five of the nation’s biggest banks and 49 state attorneys general concerned foreclosure abuses where the lenders relied on “robo-signing” of foreclosure documents without adequately reviewing the loan files.
The corner-cutting measures had become a commonly used practice in the years leading up to the financial crisis of 2008. However, as the number of loans in default spiked substantially, many of these loan files were not adequately reviewed. The governments’ case against the banks was that the foreclosure practices failed to provide borrowers who were in trouble with other alternatives like loan modifications or short pay-offs. Such alternatives could have prevented some of the home loans from tumbling into foreclosure.
The terms of the settlement required the banks to improve their servicing standards. Those terms include notifying borrowers within five days that the banks have received necessary documents to complete a loan modification. The settlement was designed to provide relief to distressed home owners and halting the housing market’s downward spiral. In sum, the guidelines included over 300 servicing standards to be followed by the banks working with struggling homeowners.
The new servicing guidelines were labeled as “much-needed relief for homeowners who were ensnared in a maddening bureaucratic maze when seeking foreclosure relief,” by the New York Times.
In short, Mr. Schneiderman’s argument is that banks have failed to adequately implement these new servicing guidelines. Finally, this case could open the door to additional legal actions by the other attorneys general who signed onto the settlement.
JPMorgan Chase to Meet with OCC
Meanwhile JPMorgan Chase & Co. (NYSE:JPM) Chase head honcho Jamie Dimon is slated for a pow-wow next week with examiners from the Office of the Comptroller of the Currency (OCC).
The meeting was the big banks idea in what appears to be a play to head off another regulatory action by the federal government. That meeting will be a face-to-face chat between junior examiners at the OCC and Mr. Dimon. The meet and greet comes on the heels of new regulatory woes facing JP Morgan.