It’s been a year since 50 state Attorneys General announced that they would undertake an investigation into bank foreclosure procedures. Many of us thought government regulators were a bit late to the party at that point, but since the damage was still in full swing they could still have taken meaningful action. Unfortunately, that hasn’t happened: at the one-year anniversary of the big announcement, negotiations are stalled and maybe that’s just as well: the settlement that appeared to be in the works for a while would have fallen far short of addressing the actual damage done (and still being done).
While the coalition hasn’t turned out to be a force for consumer protection, effective regulation or much of anything else, not every state AG was on board with the idea of a quick and painless (for the banks) settlement.
Most famously, New York Attorney General Eric Schneiderman was uninvited to the party when coalition leader Tom Miller of Iowa declared that Schneiderman was actively undermining the group’s efforts and booted him from the key group overseeing negotiations. Since the efforts of the group at that point seemed to be leaning in the direction of getting things wrapped as quickly as possible without actually gathering adequate information to understand the scope of the problem, a little undermining was just what those efforts needed.
Despite efforts to paint Schneiderman as the sole “troublemaker”, other states–with varying degrees of publicity–have undertaken their own investigations. Most recently, Illinois Attorney General Lisa Madigan, who has been investigating various aspects of mortgage fraud and mortgage rescue fraud for some time, issued subpoeanas to Lender Processing Services, Inc. (LPS) and National Title Clearing, Inc. (NTC) as she expanded her investigation into “robo-signing” practices.
New York and Illinois aren’t standing alone, either. Back in June, North Carolina AG Roy Cooper announced that his state would pursue litigation independently if talks fell apart, and California and Massachusetts have broken ranks as well.
Businessweek offers a good summary of the failures of the effort to date, the conflicting positions of the state AGs and the status of the efforts of those who have decided to act independently.