Attorneys General, Frustrated With National Foreclosure Settlement, Consider Alternate Course

Attorneys general or representatives from nearly 15 states met in Washington, D.C., on Tuesday to discuss and share different enforcement options and strategies around various mortgage-related issues, according to sources familiar with the conversation.

The meeting was prompted by the slow pace at which a national foreclosure settlement led by the Obama administration is progressing, and is likely to be the first in a series, said these sources.

The participating attorneys general, from states including California, Nevada, Delaware, Massachusetts and New York, discussed how they could possibly join together to investigate and potentially file lawsuits against abusive mortgage lenders and servicers. Principals or representatives also attended from Hawaii, New Hampshire, Missouri, Mississippi, Maryland, Kentucky, Minnesota, Oregon and Montana.

"This past Tuesday, a group of like-minded Attorneys General met in D.C. to discuss ongoing and future investigations into the mortgage finance and foreclosure industries," said Delaware Deputy Attorney General Ian McConnel.

"The talks weren't just about investigations," said a source with knowledge of the discussions. "They were also about the attorneys general offices feeling uninvolved in a process by which their federal colleagues have been negotiating on their behalf."

The administration, along with a coalition of state law enforcement officials, is currently pursuing a settlement with big banks over their role in the practice of "robo-signing" and other alleged forms of mistreatment of struggling homeowners.

After the existence of the practice came to light in October 2010, attorneys general from all 50 states banded together with the federal government to punish five large financial institutions -- Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial -- for mortgage-related misconduct, including robo-signing and failing to provide mortgage modifications to eligible homeowners. As it currently stands, that punishment would take the form of a civil settlement worth up to $25 billion. The deal would reform the mortgage servicing industry and require banks to offer relief to homeowners in the form of modifications, principal write-downs and refinancing, among other options.

The negotiations, led by Iowa Attorney General Tom Miller, hit a snag this summer when several attorneys general -- most notably Eric Schneiderman of New York and Kamala Harris of California -- objected that the deal was too narrowly focused on robo-signing and mortgage servicing and that it would release banks from liability for too much potential wrongdoing. Schneiderman and Biden called for a more thorough investigation of how home loans were originated and sold to investors.

This latest discussion, which occurred outside the national settlement talks, is yet another signal that the 50-state settlement, announced with much fanfare more than a year ago, is in trouble, and that individual Attorneys General are looking to take action on their own.

In October 2011, Delaware Attorney General Beau Biden filed suit against Mortgage Electronic Registration System, claiming the company intentionally makes it harder for borrowers to stop a foreclosure. In December, Massachusetts Attorney General Martha Coakley filed a lawsuit against five of the largest U.S. banks, accusing them of deceptive foreclosure practices. Also in December, Nevada AG Catherine Cortez Masto filed suit against Lender Processing Services for deceiving Nevada homeowners.

The mortgage servicers have not been engaged in these conversations, said a source familiar with these discussions.

This report was updated with further information about the meeting and its attendees.

Comments

[debrakasson]

03:37 PM on 02/12/2012

I was in the MOD process for 2 1/2 yrs with JP Morgan Chase and in the end, after all that time, I was given a great christmas present in the form of a denial of eligibility.....I'm trying to survive on SSD which barely covers my day to day expenses and medication. How could I be denied!!!!!!?????

Debra Kasson Illinois

[kuchthird]

02:26 PM on 02/06/2012

5. The cases are U.S. Bank N.A. v. Ibanez and Wells Fargo Bank NA v. LaRace et. Al, Supreme Judicial Court of Massachusetts, No. SJC-10694. :In Re Agard 48750818 Case 8-10-77338-reg Doc 41, 2/10/11
kuchthird 4/27/11

[kuchthird]

02:26 PM on 02/06/2012

1. Powell, supra note X, at 82.01[1][b] (quoting 11 Records of the Colony of New Plymouth in New England 12 (D. Pulsifer ed. 1861)). The earliest American deed record was a deed copied into Plymouth Bay Colony’s record book in 1627. Patton and Palomar on Land Titles, 4 (3d ed. 2003): Id. (quoting Trumbell, Connecticut Public Records of the Colony Prior to the Union with the New Haven Colony May 1665 35 (185000.: Powell, supra note X, at 82.01[1][b]. Virginia adopted its first recording statute in 1639. Patton and Palomar, supra note X, at 4 n. 7. : Unif. Com. Code. Art. 9. X.
2. OCC No. AA-EC-11-20, Article II (2); Howard Schneider, MERS Aids Electronic Mortgage Program, Mortgage Banking, January 1,1997: Christopher L. Peterson, Predatory Structured Finance, 28 Cardozol l. Rev.2185, 2208-12 (2007): Andrew Lipton, Mortgage Electronic Registration systems, Inc. (MRS): It's Impact on the Credit Quality of First-Mortgage Jumbo MBS Transactions, Moody's Investors Service Structure Finance Special, April 30, 1999,at 2.
3. Andrew Lipton, Mortgage Electronic Registration systems, Inc. (MRS): It's Impact on the Credit Quality of First-Mortgage Jumbo MBS Transactions, Moody's Investors Service Structure Finance Special, April 30, 1999,at 2: Christopher L. Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System, See infra note X and accompanying text.
4. R.K. Arnold, Yes there is Life on MERS, 11 Probate & Property (July/August 1997), supra note X, at 36.

[kuchthird]

02:25 PM on 02/06/2012

4. The financial system chose to act alone, creating an entirely new “Private” recording system that competes financially with public records, undermining the accuracy of public records, and was never authorized by the elected leaders that guide a republican system of law.
5. Courts have recently stated on MERS related cases: “the utter carelessness” that the banks demonstrated in the documenting their right to own the properties. : MERS’s business practice are unlawful.

1. Powell, supra note X, at 82.01[1][b] (quoting 11 Records of the Colony of New Plymouth in New England 12 (D. Pulsifer ed. 1861)). The earliest American deed record was a deed copied into Plymouth Bay Colony’s record book in 1627. Patton and Palomar on Land Titles, 4 (3d ed. 2003): Id. (quoting Trumbell, Connecticut Public Records of the Colony Prior to the Union with the New Haven Colony May 1665 35 (185000.: Powell, supra note X, at 82.01[1][b]. Virginia adopted its first recording statute in 1639. Patton and Palomar, supra note X, at 4 n. 7. : Unif. Com. Code. Art. 9. X.
2. OCC No. AA-EC-11-20, Article II (2); Howard Schneider, MERS Aids Electronic Mortgage Program, Mortgage Banking, January 1,1997: Christopher L. Peterson, Predatory Structured Finance, 28 Cardozol l. Rev.2185, 2208-12 (2007): Andrew Lipton, Mortgage Electronic Registration systems, Inc. (MRS): It's Impact on the Credit Quality of First-Mortgage Jumbo MBS Transactions, Moody's Investors Service Structure Finance Special, April 30, 1999,at

[kuchthird]

02:16 PM on 02/06/2012

2. From 1995 to present, there are approximately 31 million active residential mortgages registered on the MERS system (Mortgage Electronic Recording System Inc. /MERSCORP). First, the loan Originator pays to record the Deed of Trust to MERS, “that is acting solely as nominee for Lender and Lender’s successors and assigns”, at the court house. MERS then electronically tracks internal ownership transfers and servicing rights on each loan avoiding public recording fees on additional assignments that would have been recorded in the public land records. Additionally the assignments for the investors will become unnecessary. By paying MERS a fee, all the participating members through the securitization process lower their operating cost, at the counties’ expense.
3. Most Counties charge a fee, ranging from $25 to $50, to record the assignment, and use these fees to cover the cost of maintaining the real property records. Some counties also use recording fees to fund their court system, legal aid organizations, low income housing programs, schools and possibly, infrastructure repairs. In this respect, MERS’ role in acting as a mortgagee of record with nominee capacity is simply a tax evasion tool.

[kuchthird]

02:13 PM on 02/06/2012

THE DECAY OF THE AMERICAN DREAM of home ownership with title certainty, and the escalating loss of community recording income at risk. Approximately $25 Billion Owed to America’s County Clerk and Recorder Offices from MERS’ and participants’.

1. Since 1636, Massachusetts’ General Court’s first public recording laws of all real property interest, combined with time, the usefulness and necessity of these early title records is attest to by their nearly universal and most importantly, uninterruptible force in American law. Indeed, Pennsylvania’s first recording act of 1717 remains in force to this day with all fifty states and the District of Columbia obtaining recording statutes similar to their colonial predecessors. Moreover, preservation of public records of mortgages proves so successful, in the twentieth century, all fifty states have adopted Article 9 of the Uniform Commercial Code which creates an analogous recording system for virtually all forms of personal property to prevent disputes over property rights and to facilitate certainty in the evidentiary history of public records, all for the benefit of the entire community.

[ifquilt]

07:25 PM on 01/18/2012

From the "Isn't Obama the greatest most effective President ever" department:

The meeting was prompted by the slow pace at which a national foreclosure settlement led by the Obama administration is progressing, and is likely to be the first in a series, said these sources.

Yeah, I'm gonna vote for him, he's got control of the paper dragon.

[Bruce F]

02:49 PM on 01/16/2012

Normally during an evestigation as Biden is doing here will be a halt and desist order, and in this case it would include a moratorium on foreclosures. Why is that NOT being done? People cannot benefit from a cash payment if they are already kicked out of heir home. It makes no sense. There must be a moratorium on foreclosures. Mr. Biden, please do the right thing.

[Imagine 39]

12:54 PM on 01/16/2012

Open the vault- it's empty. 2 little pennies to rub together.

[ifquilt]

07:26 PM on 01/18/2012

So they can print more money, no?

[alan2a]

12:49 PM on 01/16/2012

Let's hope they follow through and take the criminals to court and subsequently to jail. No thanks to the bought and paid for Obama Administration and their joke of a DOJ. They represent the best of the Republican party in the guise of Democrats. And that's our sad choice. Obama or Romney or some other bought and paid for politician. All of them are attacking the fundamental underpinnings of our society. they are all to one degree or another going after SS, Medicare and Medicaid as well as unemployment insurance and other fundamental aspects of American society that are meant to be essentially the last lines of defense against the raging insane right wing radical 1%ers. And this and a myriad of other examples put the lie to Obama's sudden found populism. It's all a campaign sham, as was the 08 campaign. Once reelected he will revert back to being a not so moderate Republican. Oh for a viable third party candidate(and don't throw nutty racist Paul at me).

[sf1000000]

10:12 AM on 01/15/2012

I have 1 big gripe with the Obama admin is that these banks have NOT been punished. The DOJ insults are our intelligence with a $25 Billion settlement with JP Morgan annouces that it's profit for Q4 are down to $19 Billion..and might have to raise fees on consumers.
Perhaps both the Dems and GOP can come together on this fact, these banks have Destroyed the US Economy..costing the American people $9 Trillion in losses from everything from our homes to our 401K...
If the banks and the DOJ that this is going away I think they better RETHINK their position..PEOPLE want JUSTICE and OWS is still here and the demand for accounting and for jail for these criminals is going to happen..We the 99% demand it..regardless of what the DOJ and the banks want.

[alan2a]

12:53 PM on 01/16/2012

Really. that's your one gripe with Obama? How about indefinite detention, killing American citizens with any constitutional due process. How about expanding domestic surveillance. How about attacking SS and Medicare. How about expanding the imperial Presidency and adopting signing statements, etc., etc., etc. If it wasn't for the absolutely insane current Republican Party Obama would be seen as the worst incarnation of a supposed Democratic President in the last 100 years.

[K August]

08:16 AM on 01/15/2012

I'm glad this is getting more press......I was really tired of seeing all the "blame the victims" type comments. All these companies colluded against home buyers......they had appraisers giving inflated values (and they were paid by the these companies).

Some were caught falsifying income of borrowers, some were putting them into sub-prime loans despite having credit scores that qualified for lower interest loans. They ALL conspired against home buyers and they still are with things like letting insurance policies lapse (when the lender had them included in the mortgage) and then buying policies that were outrageously overpriced and then raising mortage payments to reflect the additional cost!

I'm so glad I missed this whole mess.....I bought my house years ago.....land sales contract....no banks....just made payments to the owner for 15 years. Interest was higher then but money was worth more and houses were much more affordable.

[vandegrasse]

05:26 AM on 01/15/2012

Strange the administration or anyone should be negotiating with criminals!

[ifquilt]

07:27 PM on 01/18/2012

Birds of a feather?

[Kenz300]

05:19 PM on 01/14/2012

White collar crime is still a crime.

When are these bankers going to jail for sinking the economy?

[Dany Clementson]

02:37 PM on 01/14/2012

Corruption of Real Property laws in this country has been systematic, deliberate, and ongoing since the creation of MERSCORP. One by one, property and foreclosure statutes designed to protect consumers from illegal acts committed by lenders before, during and after the process of financing a home loan, have been subverted to protect lenders rather than borrowers.

Nowhere else in this country is this more evident than in Colorado, where this virus has been allowed to propagate for so long that it has destroyed every living cell within the ColoradoRevisedStatutes designed to protect homeowners.

If this disease spreads it will destroy every protection remaining anywhere that it finds.

Our Public Trustee system consists of elected or appointed officials paid by legislative act. However, you can't take the Trustees to task as state employees even though a District Court Judge has to entertain a petition by the lender before foreclosure can proceed.

Between MERSCORP and the Banks all that is required to foreclose is the signature of an Attorney attesting to the fact that lender is holder of the note, without one piece of documentation.

I once heard someone trying to explain the unexplainable like this, "I shit you not."

Check out Title 38 of the CRS if you think I'm crying wolf, then bar the entrance to your states law-makers, if you don't our diseased ridden due process protections will infect and destroy what's left of your protections before you have a chance to say, "What the?"

DLC