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New York Attorney General Starts Solo Investigation of Mortgage Securitization Practices

May 31, 2011

Our Rancho Cucamonga foreclosure defense attorneys have watched the news on the robo-signing investigation by the attorneys general of all the states, hoping it would provide information and meaningful penalties. So we were interested to see an apparently independent investigation being launched by the attorney general of New York, Eric Schneiderman. Schneiderman's office has requested information and meetings with Bank of America, Morgan Stanley and Goldman Sachs, the New York Times reported May 17. In particular, his office appears to be looking at the way the three institutions bundled mortgages into investments. Those practices have been the focus of many private lawsuits.

Securitization is widely considered one reason for the housing crisis, under the theory that passing along the risk to investors took away lenders' incentives to make sure borrowers could pay back their loans. Some recent lawsuits allege that financial institutions bundled loans they knew were bad into securities, then misled investors about the quality of the securities. That's one possible avenue of investigation, the Times said. Others include inadequate disclosure to mortgage insurers -- which could include Fannie Mae and Freddie Mac -- or unreasonable credit risks taken by investors in mortgage lending companies known to be taking risks. Schneiderman's investigation signals that he won't be willing to agree to a settlement in the robo-signing investigation if it includes a provision forbidding further investigations.

As Santa Ana foreclosure defense lawyers, we applaud Schneiderman for opposing such a provision, and for investigating mortgage securitization. As the attorney general for the state that includes the headquarters of the nation's financial industry, he's in a unique position to investigate whether there indeed was large-scale misconduct on Wall Street. An investigation into mortgage securitization fraud would benefit investors, but it would also benefit any borrowers whose loans turned out to have been known as risky. If Schneiderman's investigation turns up fraudulent practices in lending, that knowledge could be a major benefit to homeowners who are now facing foreclosure. Homeowners who can prove their loans were predatory under certain laws can sue the lender to restructure or cancel the loan.

If you're in default or foreclosure and you're ready to fight for your home, you should call Howard Law PC. Based in Anaheim, we represent borrowers throughout California who are fighting unhelpful or disorganized banks for a chance to stay out of foreclosure. Our Oceanside foreclosure defense attorneys frequently hear from borrowers who are pursuing a HAMP loan modification but were arbitrarily rejected, or had the bank decline to make a temporary modification permanent. When borrowers meet all of the qualifications laid out by HAMP, this is against the rules -- and you can sue to enforce them. Another common complaint is about lenders foreclosing with no notice and no attempt to discuss an alternative -- a violation of California law, which allows us to stop the foreclosure with a lawsuit.

Howard Law offers free, confidential case evaluations, so you can talk to us about your situation and your options at no risk. To reach us today, call 1-800-872-5925 or send us an email.