N.Y. to sue Bank of America, Wells Fargo over alleged violations of mortgage deal New York's top prosecutor said he received 339 complaints from homeowners who said the behemoth banks dragged their feet in processing loan modifications, a direct violation of the mortgage servicing standards stipulated in the settlement. The banks allegedly failed to respond to requests for principal or interest-rate reductions within the 30 days allotted, to allow borrowers to submit missing documentation or to acknowledge receipt of applications. "Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure," Schneiderman said in a statement. I intend to use every tool available to my office to hold these companies accountable. The settlement mandates that the servicers provide a combination of direct payments and consumer relief, such as principal reductions and forbearance. It also includes 304 "servicing standards" to prevent servicers from initiating a foreclosure while simultaneously negotiating a modification, a practice known as dual-tracking. Banks also were supposed to give borrowers a single point of contact to ensure they weren't being bounced around to different employees with each interaction. The settlement stemmed from revelations that servicers were using forged and shoddy paperwork to quickly foreclose on struggling homeowners, a practice known as "robo-signing." As of December, more than half a million homeowners have received some $46 billion worth of loan modifications, short sales, refinancing and forbearance, according to the latest report from the court-appointed monitor of the settlement. Banks have three years to complete relief efforts. Advocacy groups have grown weary of the settlement. At the time the deal was reached, consumer advocates were pleased that it included extensive servicing standards to prevent a repeat of the types of abusive foreclosure practices that ran rampant during the housing crisis. But within months of the agreement, housing counselors started to receive complaints that servicers were back to their old behavior. A survey in April of 85 housing counselors in California, representing hundreds of thousands of borrowers, revealed claims that banks are violating consumer protection provisions in the settlement. About 70 percent of the counselors told researchers at the California Reinvestment Coalition that the single points of contact banks provide were rarely accessible or knowledgeable. Sixty percent of counselors also said the banks rarely made modification decisions within 30 days of a submitted application. In New York, the attorney general's office was flooded with complaints by November that Bank of America and Wells Fargo were not responding to modification requests in a timely manner, according to the attorney general. By the end of April, the prosecutor's office documented 210 violations by Wells Fargo and 129 by Bank of America. Officials at Wells Fargo declined to comment, while Bank of America could not be immediately reached for comment. "We have many clients who are at risk of losing their homes to foreclosure simply because Wells Fargo failed to properly review complete loan modification packages sitting in their office for months," said Megan Faux, acting director of Legal Services NYC Brooklyn. Accountability to the servicing standards is essential to ensuring homeowners have a fair opportunity to negotiate an affordable mortgage and ending the housing recovery. On Friday, Schneiderman sent a letter to the court-appointed monitor of the settlement , Joseph Smith, and the monitoring committee notifying them of his intentions to sue if the committee fails to rein in the banks. The settlement monitor could not be immediately reached for comment.