Home loan investigation to be led by N.Y. attorney general

Jessica M. Karmasek Jan. 25, 2012, 12:24pm


WASHINGTON (Legal Newsline) - New York Attorney General Eric Schneiderman will co-chair a national mortgage crisis unit aimed at investigating home lending by banks.

President Barack Obama announced the creation of the unit during his State of the Union address Tuesday evening.

"Tonight, I'm asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis," Obama said.

"This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans."

Schneiderman, who will co-chair the unit along with officials from the Department of Justice, Internal Revenue Service and the Securities and Exchange Commission, says the unit will focus on those actions that created the financial crisis, not the abuses that occurred after.

"I would like to thank President Obama for his leadership in the creation of a coordinated investigation that marshals state and federal resources to bring justice for the victims of the misconduct that caused the mortgage crisis," he said in a statement.

"In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the economic crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again.

"The American people deserve a robust and comprehensive investigation into the global financial meltdown to ensure nothing like it ever happens again, and today's announcement is a major step in the right direction," he said Tuesday evening.

In August, Schneiderman was removed from an executive committee negotiating a nationwide foreclosure settlement.

Iowa Attorney General Tom Miller, who is leading the committee, said at the time that the New York attorney general was "actively worked to undermine" its effort.

Since then, Schneiderman -- along with California's Kamala Harris and Nevada's Catherine Cortez Masto -- has started his own comprehensive investigation.

The probe began in October 2010 with inquiries into so-called "robosigning" practices by several mortgage companies, and has since broadened into identifying and addressing additional alleged improper foreclosure practices.

For months, the attorneys general and federal officials have been in talks with five banks over their mortgage foreclosure practices, including Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp.

So far, no deal has been reached with the banks.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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