When New York Attorney General Eric Schneiderman announced his intention to sue Wells Fargo (NYSE: WFC) and Bank of America (NYSE: BAC) over scores of alleged breaches of last year's $26 billion fraudclosure settlement, B of A got tough. Almost immediately, the bank's attorneys fired off a letter to the NY prosecutor, chiding him for attempting to sue before informing the bank of the exact nature of the allegations, or giving Bank of America time to correct any problems.
In the letter, Bank of America also denied the allegations made by Schneiderman, stating that he has no right to sue under the terms of the settlement -- and asked that the charges be withdrawn.
While it isn't a surprise that B of A would deny any wrongdoing, it seems as if they may have had a valid point. According to American Banker, Schneiderman has modified the charges and suspended the case, according to the Iowa AG's office, which sits on the foreclosure settlement monitoring committee.
B of A knows the drill when it comes to foreclosures
Though no details were available as of Friday, The New York AG's office was apparently planning to send the monitoring committee additional information by mid-week. Though neither bank commented on the retraction, the whole affair looks like a potential black eye for Schneiderman's office, and a real victory for the banks.
The speed with which the megabank rebuked the Attorney General not only showcases its pluckiness, but also its confidence that it hasn't violated the terms of the agreement. This isn't the first time Bank of America has shown this type of poise regarding foreclosures, even as its peers have questioned their own procedures.
When the Office of the Comptroller of the Currency released procedural guidelines regarding foreclosures in April, Citigroup, Wells Fargo, and JPMorgan Chase (NYSE: JPM) all ceased their foreclosure sales in response. JPMorgan is back on track after making sure its procedures are conforming with regulators' parameters, but both Citi and Wells are still in slowdown mode as they ensure compliance. Bank of America didn't miss a beat, obviously secure in the knowledge that it was already fulfilling the letter of the law.
As for Schneiderman's allegations, time will tell if they actually have any legs. It is interesting, though, that he jumped on this issue when the monitoring committee is planning a compliance report soon.
If B of A is truly on the money when it comes to keeping up with protocol in the remediation of the foreclosure crisis, it shows that the bank is serious about moving forward, and leaving the Countrywide mess far behind.
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