The office of New York Attorney General Eric Schneiderman said it had received 339 complaints from homeowners concerning non-compliance with a settlement with banks that included an agreement to modify some loans to lower payments and direct payments to homeowners victimized by mortgage abuses.
The Washington Post reported Monday that Schneiderman has threatened to take Bank of America and Wells Fargo to court to force them to comply with terms of a settlement that involved running foreclosure mills -- offices that rushed the foreclosure process so fast that they were accused of signing documents submitted to courts without reading them, a practice known as robo-signing.
But the Post said the trouble with the settlement is only one of several major settlements with financial firms in which homeowners are waiting for compensation or mortgage relief, while banks pay consultants lucrative fees to sort through who gets what.
In one of the settlements, eight consultants have been paid $2 billion to sort through which homeowners are to receive compensation. While the consultants get paid, not a dime has yet gone to homeowners, the Post said.
A series of settlements with lenders has been announced since the mortgage market first began to implode in 2007 and 2008. In total, banks have agreed to pay $5.7 billion in cash to homeowners as part of 30 different settlements, the Post said. But less than half of the agreed compensation has been paid out, the Post said.
"I think that the OCC, the Fed [the Office of Comptroller of the Currency and the U.S. Federal Reserve], greatly underestimated the complexity of the task," Daniel Stepano, deputy chief counsel for the OCC, told members of the Senate banking committee in April. "The large number of institutions, independent consultants and counsel involved in the process ... required substantial regulatory oversight."