California Attorney General Kamala Harris and Catherine Cortez Masto, Nevada’s Attorney General, announced today at a press conference in Los Angeles that they will share litigation strategies, information and evidence.
The cooperation is designed to speed investigations of wrongdoing in mortgage loan origination, servicing, and securitization, Harris said. Because Nevada and California are “non-judicial foreclosure states,” foreclosures on homeowners behind on mortgage payments can be completed in nine months, she said. One in 243 homes in California, and one in every 180 Nevada homes has entered the foreclosure process, Harris said.
Harris didn’t name the banks that were the focus of the investigation. “We’ll see what the investigation unfolds,” she said. Bank of America was given a subpoena on Oct. 18 seeking information related to the packaging and sale of mortgage-backed securities, said a person familiar with the matter who wasn’t authorized to discuss it and didn’t want to be identified.
State attorneys general across the U.S. have been negotiating a possible settlement with JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc. that would resolve a probe into foreclosure practices of the five biggest mortgage servicers. The probe, which had involved attorneys general from all 50 states, began more than a year ago after disclosures that faulty documents were being used to seize homes.
U.S. Negotiations
State and federal officials are aiming to reach a deal that would provide mortgage relief to homeowners and set requirements for how mortgage servicers conduct home foreclosures and interact with borrowers.
Vickee Adams, a spokeswoman for San Francisco-based Wells Fargo, declined to comment on today’s announcement of a joint probe by California and Nevada. Mark Rodgers, a spokesman for New York-based Citigroup, and JPMorgan spokesman Tom Kelly declined to immediately comment. Gina Proia, a spokeswoman for Detroit-based Ally Financial, also declined to comment.
Shirley Norton, a Bank of America spokeswoman, didn’t immediately return a call seeking comment.
In September, Harris said she was withdrawing from the nationwide talks, saying a proposed settlement was “inadequate” and would allow too few California homeowners to stay in their homes. Harris said then she would instead pursue her own mortgage investigation in the most populous state.
Massachusetts Lawsuit
Last week, Massachusetts Attorney General Martha Coakley sued the five banks, accusing them of conducting unlawful foreclosures and deceiving homeowners.
In a statement today, Coakley said she will work “cooperatively” with California and Nevada and that she supports their efforts to “move forward with comprehensive investigations into the illegal and deceptive foreclosure practices of the national banks.”
Masto said today she was waiting to see what the terms of nationwide settlement with the five banks are before deciding whether Nevada will also opt out. She said the negotiations are “not going to hinder us from doing what we have to do on behalf of homeowners in our state.”
In August, Masto asked a U.S. judge to terminate a settlement with Bank of America over home-loan modifications tied to its Countrywide mortgage unit, saying the company hadn’t complied with terms of the accord. Charlotte, North Carolina- based Bank of America seeks to dismiss the claim, according to a Dec. 1 court filing.
“This crisis is causing great havoc on the economy of Nevada,” Masto said today. “Neighborhoods are descending into blight.”
To contact the reporters on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net; Edvard Pettersson in Los Angeles at epettersson@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
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