Report: Liability releases holding up mortgage deal

Jessica M. Karmasek Jul. 25, 2011, 10:35am


WASHINGTON (Legal Newsline) - A deal with the country's top mortgage servicers is reportedly being held up over liability releases.

Bloomberg News reported that the lenders -- which include Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc. -- want protection from additional claims over and investigations into their mortgage practices.

Attorneys general Beau Biden, of Delaware, and Eric Schneiderman, of New York, were among those who came out against the liability releases last week. Servicing, they argue, is at the center of the proposed $20 billion settlement deal with the banks.

State attorneys general, the U.S. Justice Department, Treasury Department and the new Consumer Financial Protection Bureau are in the midst of negotiating a settlement with the five mortgage servicers.

The mortgage foreclosure probe began in October with inquiries into so-called "robosigning" practices by several mortgage companies, and has since broadened into identifying and addressing additional alleged improper foreclosure practices.

Schneiderman is currently doing his own comprehensive investigation into the mortgage industry.

In May, he sought records from Bank of America and two other Wall Street banking giants, Morgan Stanley and Goldman Sachs.

Last month, he requested documents from a handful of financial institutions -- including Bank of New York Mellon Corp. and Deutsche Bank AG -- that act as trustees for mortgage bond trusts.

And earlier this month he questioned an $8.5 billion deal between Bank of America and more than a dozen investment firms.

According to Bloomberg, JPMorgan Chase's CEO has said that the bank would go to court if necessary.

"I would do anything to get it done today," Jamie Dimon said earlier this month of the settlement. "But we've got to get it right. We're not going to do it and be subject to double and triple jeopardy. We'd rather litigate it."

From Legal Newsline: Reach Jessica Karmasek by email at

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Morgan Stanley
1585 Broadway, New York, NY 10036, United States
New York, NY 10036

Citibank Building, New York, NY, United States
New York, NY 10022

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