Report: N.Y. AG's probe of mortgage industry growing

By Jessica M. Karmasek | Jun 13, 2011


NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman has reportedly expanded his probe of the mortgage industry, now requesting documents from a handful of financial institutions that act as trustees for mortgage bond trusts.

Bloomberg News reported Monday that Schneiderman has asked for documents from Bank of New York Mellon Corp. and Deutsche Bank AG.

An unnamed source told Bloomberg that between five and 10 trustees were being asked to provide information to the New York and Delaware Attorney General's offices. Both states are investigating whether the trusts are legal, the source said.

According to Bloomberg, New York law controls more than 80 percent of the trusts. Delaware controls the remaining 20 percent.

Last month, Schneiderman began his own comprehensive investigation of the mortgage industry, seeking records from Wall Street banking giants Bank of America, Morgan Stanley and Goldman Sachs.

The attorney general's records requests are part of his "review of factors" leading to the financial crisis in 2008.

Some say Schneiderman's requests could mean he is breaking away from the other 40-plus state attorneys general heading up a nationwide investigation into mortgage foreclosures.

But he wouldn't be the only one.

In April, Oklahoma Attorney General Scott Pruitt was said to be working on his own settlement with the mortgage servicers at the center of the investigation.

"Attorney General Pruitt has instructed his public protection team to craft a settlement that is specific to Oklahoma's concerns of punishing bad actors while respecting the appropriate role of attorneys general," a spokesperson for Pruitt's office said in a statement.

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.

The state attorneys general, U.S. Justice Department, Treasury Department and Consumer Financial Protection Bureau are currently working a settlement with the country's five largest mortgage servicers.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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