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Wells Fargo likely to face N.Y. lawsuit; Bank of America to avoid action

Wells Fargo is likely to face a lawsuit from the New York attorney general’s office as early as Wednesday morning – a legal battle Bank of America appears to have avoided after agreeing to beef up its mortgage servicing.

New York Attorney General Eric Schneiderman said in May that he planned to take action against both banks after receiving complaints that they had violated provisions of a $25 billion mortgage servicing settlement entered into in 2012. His office specifically claimed the banks did not follow new standards governing how quickly they should respond to homeowners seeking a mortgage modification. The banks have been in discussions with Schneiderman's office since then.

Bank of America said Tuesday night that it had reached a formal agreement with Schneiderman and would not be sued. Among other things, the agreement means Bank of America will allow homeowners to walk into its customer assistance centers and take care of more mortgage modification issues related to the settlement. The bank will also assign single points of contact at the bank for housing counselors working on behalf of borrowers. And Bank of America will create a working group to meet regularly with the New York attorney general's office.

Dan Frahm, a spokesman for the Charlotte-based bank, said Bank of America has brought aspects of this agreement to the monitoring committee overseeing the $25 billion settlement and see if other states would want to take part. North Carolina Attorney General Roy Cooper sits on that committee.

“We’re pleased to resolve without litigation the matters brought forward by the New York Attorney General related to loan modifications and other assistance mortgage servicers provide homeowners in need of assistance,” Frahm said in a statement.

Wells Fargo did not come to an agreement with New York, and Schneierman is set to announce his office will sue the San Francisco bank at a news conference Wednesday morning, The New York Times reports.

In a statement, Wells spokeswoman Vickee Adams said the bank is "proud of its track record of providing important relief to borrowers in New York and nationwide." She said Wells has continually made improvements to its servicing since the settlement was announced.

Dunn: 704-358-5235; Twitter: @andrew_dunn
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