SAINT PAUL, Minn. (Legal Newsline) - In a letter sent to the attorneys general of New York and Iowa on Friday, Minnesota Attorney General Lori Swanson said that banks shouldn't be protected from liability in connection with the nationwide foreclosure settlement.
Swanson said that banks should not be released from liability for mortgage securitization, securities claims or the use of a mortgage registry known as MERS, Bloomberg News reported.
"The banks should not be released from liability for conduct that has not been investigated and is not appropriately remedied in any settlement," Swanson wrote, according to Bloomberg News.
State and federal officials are negotiating a settlement with the five largest mortgage services in the U.S. - Bank of America Corp., Wells Fargo & Co., JP Morgan Chase & Co., Citigroup Inc. and Ally Financial Inc.
Iowa Attorney General Tom Miller, who is leading the committee negotiating the nationwide foreclosure settlement, received criticism in late August for removing New York Attorney General Eric Schneiderman from the committee, pointing to Schneiderman's refusal to join a negotiation committee in June.
"Since that time, New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with," Miller said, according to The Washington Post. "While we certainly respect the right of any state to choose to no longer participate in a multistate and to pursue another path, working to actively undermine a multistate while still a member of the executive committee simply doesn't make sense, is unprecedented and is unacceptable."
Schneiderman and Delaware Attorney General Beau Biden have raised concerns about the scope of liability releases.
Schneiderman filed a lawsuit in early August against a proposed $8.5 billion settlement between Bank of New York Mellon Corp. and Bank of America, alleging that Bank of New York misled and breached its duties to investors. Biden also joined the fight against the proposed deal.
The nation's top lenders have said that they want protections from additional claims over and investigations into their mortgage practices.
John L. O'Brien, the register of deeds for Southern Essex County, Mass., has called for Miller to remove himself from the committee.
"Miller has received hundreds of thousands of dollars in campaign contributions from the very bankers and their associates that he purports to regulate," O'Brien said.
"It seems to me that he has become the voice of Wall Street and he has abandoned Main Street. If property rights mean anything in this country, the attorneys general will cease all talks with these banks immediately, and I am urging the American people to contact their attorney general and ask them to do just that."