What N.Y., Del. and a few other states are doing about mortgage misconduct
State attorneys general gathered in Chicago or by conference call Monday to go over possible terms for a deal with large banks over foreclosure wrongdoing, but several states are pursuing their own courses -- to the cheers of liberal groups and consumers who want bankers to be sued rather than settled with.
Here's a quick rundown:
New York Attorney General Eric T. Schneiderman launched his own mortgage probe. In an opinion piece he wrote with Delaware Attorney General Beau Biden in November, the two men said that what was needed is "a more comprehensive investigation before the financial institutions at the heart of the crisis are granted broad releases from liability." It's not just about foreclosures or the housing market, they said, but also about the way mortgages were securitized.
"Any real effort to repair the damage caused by the collapse of the housing bubble must address the injury in both sectors," they wrote in the Politico piece. "Tens of millions of homeowners and millions of investors — including retirees with money in pension and mutual funds — were devastated by this manmade catastrophe."
Biden, the Delaware AG, had just filed suit against the mortgage registrar MERS when the piece appeared. Here's the press release announcing the lawsuit, and here's the complaint itself. MERS contends there's no merit to the suit, which alleges deceptive practices.
Also in December, California and Nevada's attorneys general said their offices have teamed up on civil and criminal investigations into mortgage misconduct. California Attorney General Kamala D. Harris recently sued Fannie Mae and Freddie Mac, while Nevada Attorney General Catherine Cortez Masto sued Lender Processing Services.
Maryland's attorney general, Douglas F. Gansler, said through a spokesman Monday that he has neither decided to sign nor decided not to sign the settlement and would be going over the proposed terms carefully.
U.S. Rep. Elijah E. Cummings, a Baltimore Democrat who is focused on foreclosure issues, said he very much wants to see a settlement deal but thinks this is probably not yet the right time for one. He agrees with those who think officials don't have enough information about the full scope of the problems.
“If I was following anybody, I’d probably be looking at what Schneiderman is doing up in N.Y., just really doing as in-depth an investigation I possibly could before coming to an agreement," he said.