Following reports last week that New York Attorney General Eric Schneiderman has begun investigations into mortgage foreclosure and securitization fraud, the California Attorney General announced an even broader investigation into mortgage practices yesterday. An article by Alejandro Lazo in yesterday’s Los Angeles Times details the investigation.
California AG Kamala Harris said that the investigation will delve into three areas:
- “Corporate fraud, including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses”.
- “Scams, including instances in which consultants, lawyers and others took fees from people in foreclosure, saying they would help the homeowners get loan modifications or other remedies, but delivered nothing”.
- “Fraudulent lending practices, including deceptive marketing, failure to fully disclose loan terms and qualifying people for loans who couldn’t afford the terms”.
Harris said that foreclosures have caused California to lose as much as $640 billion since the housing bubble collapsed, and there “is a direct connection” between mortgage and foreclosure fraud and state budgetary shortfalls. Lost property taxes alone in California account for a sizeable amount.
This is to my knowledge the broadest investigation into mortgage abuses yet undertaken. It is increasingly clear that the joint investigation that was joined by all 50 state attorney generals earlier in the year will not bear significant fruit. The investigation was headed up by Attorney General Tom Miller of Iowa and was originally going to involve criminal investigations into mortgage fraud (Miller promised to “put people in jail“). Shortly thereafter, the group decided not to pursue a criminal investigation. A $20 billion settlement number was proposed, which the banks quickly rejected, offering up $5 billion. That democratic and republican attorney general are starting their own investigations shows that the broader settlement is crumbling and is not politically acceptable on either side of the aisle.
Will this investigation be effective? Honestly, I have no idea. I had initial hopes for the national investigation, which promptly went nowhere. I am not going to hold my breath for the California or New York investigations, although I will monitor them closely. We should know relatively quickly whether these offices have the political backbone and independence to carry on a full investigation.
Loading ...
Robert Quintana
May 24, 2011 @ 7:50 pm
How do we get in contact with these investigators? I would like them to check into my mortgage lenders who are charging me double on my hazardous insurance by placing thier own insurance on top of mine.
Reply
Michael Kraus Reply:
May 25th, 2011 at 8:47 am
You can contact the California AG’s office here:
http://oag.ca.gov/contact
I have no idea how they are conducting their investigation, so I don’t know whether or not contacting them will do anything for you.
Reply
Donna
May 25, 2011 @ 1:49 pm
Mr. Kraus,
You doubt is justified. I have contacted AG Harris’s newly set up task force and within 12 hours got a response from them. http://www.wellsfargomortgagefraud.com
The task force clearly stated that AG’s office has no jurisdiction over ‘too big to fail’ and ‘too big to jail’ banks like Wells Fargo. For those homeowners who have been defrauded by big banks, they have to contact Office of Comptroller of Currency (OCC). What a joke!
We felt it like an April fool’s day prank on homeowners who are sufferring daily by “too big to fail’ and “too big to jail” banks’ massive fraud.
Reply