Divide Widens Within AG Camp Over Robo-Signing Settlement
By: Carrie Bay
A year after evidence of robo-signing related to the processing of home foreclosures surfaced, state attorneys general don’t seem to be any closer to a consensus on what should and shouldn’t be included in the settlement. In fact, dissension among states’ lead counsels is growing.
Kentucky Attorney General Jack Conway and Minnesota Attorney General Lori Swanson are now speaking out in opposition of any settlement agreement that would protect servicers from future liability and questioning the thoroughness of the states’ investigation.
Conway’s concerns rest with releasing servicers from legal responsibility for actions that he says have not been sufficiently scrutinized.
In an email to the Progressive Change Campaign Committee, Conway said, “Today’s economic crisis was caused by Wall Street acting improperly. Every American has paid the price — with families losing their homes, investors losing their money, and many Americans losing their jobs.”
Conway continued, “There should be absolutely no criminal or civil immunity given to banks for activity that has not yet been investigated.”
Swanson says she’s against a collective settlement agreement that includes liability protection for mortgages that have been securitized or for improper ownership transfers and documentation related to servicers’ use of Mortgage Electronic Registration Systems (MERS).
Her stance mirrors that of Conway’s. “The banks should not be released from liability for conduct that has not been investigated and is not appropriately remedied in any settlement,” Swanson said in a letter to fellow attorneys general that was obtained by Bloomberg News.
Swanson and Conway join a growing faction of state counsels raising concerns over how far a national settlement with major mortgage servicers should extend.
Last month, New York Attorney General Eric Schneiderman was excused from the executive panel working towards a settlement agreement by lead investigator Iowa Attorney General Tom Miller.
Miller and federal officials accused Schneiderman of “undermining” the multistate talks. Schneiderman has been very outspoken about his opposition to a settlement that might include a liability release and prevent further investigations into the servicers’ foreclosure practices and any violations to securitization agreements.
Several other attorneys general – Beau Biden of Delaware, Martha Coakley of Massachusetts, and Catherine Cortez Masto of Nevada – have also publicly expressed reservations about the ongoing settlement negotiations.
While the issue keeps coming up in commentary from attorneys general, Miller’s office has told DSNews.com that the AG Negotiating Committee does not intend to release servicers from all civil liability, including accountability related to securitized loans.
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