2014 Government Regulations & Business Summit
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By David McLaughlin and Margaret Cronin Fisk
WASHINGTON - About a dozen state attorneys general met this week to discuss their mortgage investigations and how they might work together as settlement talks with banks over foreclosures drag on, three people familiar with the matter said.
The group, which met in Washington, included New York Attorney General Eric Schneiderman, California’s Kamala Harris and Martha Coakley of Massachusetts, according to two of the people, who declined to be named because they weren’t authorized to speak about the meeting. Schneiderman, Harris and Coakley are each conducting separate investigations of bank practices.
The meeting occurred as state and federal officials are negotiating a settlement with the five largest mortgage servicers, including Bank of America Corp. and JPMorgan Chase & Co., that would set requirements for conducting foreclosures and provide relief to homeowners.
Schneiderman, Harris and Coakley, along with Nevada Attorney General Catherine Cortez Masto and Delaware’s Beau Biden, have raised concerns about any deal that protects banks from future investigations. Masto and Biden also attended the Jan. 10 meeting, according to one of the people. The five states aren’t among those negotiating directly with the banks.
“A number of likeminded AGs met together to discuss current and ongoing investigations into the mortgage finance and foreclosure industries in addition to prospective or future investigations that may be fruitful,” Delaware Deputy Attorney General Ian McConnel said in a phone interview. He declined to comment further.
Harris and Masto announced in December they were collaborating in their mortgage and foreclosure investigations. Schneiderman and Biden are also cooperating. In December, Coakley sued Charlotte, North Carolina-based Bank of America, New York-based JPMorgan, Citigroup Inc., Wells Fargo & Co. and Ally Financial Inc., accusing them of conducting unlawful foreclosures and deceiving homeowners.
At the meeting in Washington, the attorneys general talked about their own investigations and litigation as well as different enforcement strategies and options, one of the people said. They talked about the Massachusetts case, Delaware’s lawsuit against Mortgage Electronic Registrations Systems Inc. and Nevada’s lawsuit against Bank of America, according to the person.
The officials also discussed their concerns about the terms of the possible foreclosure settlement with the banks and their frustrations about the lack of information they’re getting about the negotiations, said one of the other people.
Harris in September called a proposed settlement with the banks “inadequate” and said California was being asked “to excuse conduct that has not been adequately investigated.”
One person familiar with the matter said more such meetings among attorneys general will probably be held.
Iowa Attorney General Tom Miller is leading talks for the states. Geoff Greenwood, his spokesman, said in an e-mailed statement that Miller and other representatives of the negotiating team “encourage input from their colleagues.”
“Through frequent conference calls, they have kept state attorneys general apprised of developments and have received helpful feedback and constructive input,” Greenwood said. “They look forward to continuing to working with their colleagues as they work hard toward reaching a solid settlement agreement.”
Over the weekend, the Justice Department contacted four smaller mortgage servicers, including U.S. Bancorp, PNC Financial Services Group Inc. and HSBC Finance Corp., with the goal of including them in any future settlement agreement. The overture was a first step meant to get reaction from the smaller banks.
Bank lawyers and regulators with knowledge of that effort said the smaller institutions remain reluctant to sign on to any one-size-fits-all deal in part because they don’t have the same legal exposure as their bigger competitors. The lawyers and regulators didn’t want to be identified because the talks are private.
The lawyers also said the smaller servicers have no incentive to endorse any agreement that hasn’t been completed.