Foreclosure Talks Snag on Bank Liability

[ProSense]

Foreclosure Talks Snag on Bank Liability

By RUTH SIMON, VANESSA O'CONNELL and NICK TIMIRAOS

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U.S. and state officials dismissed the push for broad immunity as a "nonstarter," according to a federal official involved in the talks, but they have countered with a narrower offer. It would cover robo-signing and other servicer-related conduct but leave banks open to potential legal action for wrongdoing in fair lending and securitization, according to people familiar with the situation. Attorneys general in California, Delaware, Massachusetts and New York have said they are investigating mortgage-securitization practices.

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Nevada Attorney General Catherine Cortez Masto said she is "going to be very cautious" about any release that could affect investigations or litigation. Ms. Masto has alleged that Bank of America violated the law in its handling of troubled loans. "A broad release isn't going to do … any good (for me) or the people of my state."

Massachusetts Attorney General Martha Coakley recently said she won't let banks escape potential legal liability for claims related to securitization and use of the Mortgage Electronic Registration Systems "until we know all the facts and all of the damage." Doing otherwise "is like buying a used car without looking under the hood. There's a good chance you will get a lemon."

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Delaware Attorney General Beau Biden has also begun investigating securitization and other mortgage-industry practices. "We would oppose any settlement that would release claims broader than servicing conduct," says Delaware Deputy Attorney General Ian McConnel."That would include origination, securitization and (Mortgage Electronic Registration Systems) claims."

On edit: Good to see these Democratic AGs pursuing this.

[enough]

1. Yes the Dem AG's are pursuing it, but the "Dem" Obama Administration is pushing in the opposite

direction.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=433x752403

[ProSense]

2. Hmmm?

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In an interview on Friday, Mr. Donovan defended his discussions with the attorney general, saying they were motivated by a desire to speed up help for troubled homeowners. But he said he had not spoken to bank officials or their representatives about trying to persuade Mr. Schneiderman to get on board with the deal.

“Eric and I agree on a tremendous amount here,” Mr. Donovan said. “The disagreement is around whether we should wait to settle and resolve the issues around the servicing practices for him — and potentially other A.G.’s and other federal agencies — to complete investigations on the securitization side. He might argue that he has more leverage that way, but our view is we have the immediate opportunity to help a huge number of borrowers to stay in their homes, to help their neighborhoods and the housing market.”

And Alisa Finelli, a spokeswoman for the Justice Department. said: “The Justice Department, along with our federal agency partners and state attorneys general, are committed to achieving a resolution that will hold servicers accountable for the harm they have done consumers and bring billions of dollars of relief to struggling homeowners — and bring relief swiftly because homeowners continue to suffer more each day that these issues are not resolved.”

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That is sort of in conflict with the rumor factor of the article. Still, it's clear that if the AGs don't agree, there will be no deal.

[Supersedeas]

4. make you wonder what is going on behind the scenes

[Supersedeas]

3. it is a delicate dance that an AG has to do with big banks in their jurisdictions