Schneiderman
NEW YORK (Legal Newsline) -- New York Attorney General Eric Schneiderman has been removed from an executive committee negotiating a nationwide foreclosure settlement with the country's top lenders.
Iowa Attorney General Tom Miller, who is leading the committee, said Schneiderman has "actively worked to undermine" its effort.
State attorneys general, the U.S. Justice Department, Treasury Department and the new Consumer Financial Protection Bureau are in the midst of negotiating a deal with the five mortgage servicers -- Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc.
Miller, in a statement Tuesday, pointed to Schneiderman's refusal to join a negotiation committee in June.
"Since that time, New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with," the Iowa attorney general said, according to The Washington Post.
"While we certainly respect the right of any state to choose to no longer participate in a multistate and to pursue another path, working to actively undermine a multistate while still a member of the executive committee simply doesn't make sense, is unprecedented and is unacceptable."
Schneiderman is currently doing his own comprehensive investigation into the mortgage industry.
In May, he sought records from Bank of America and two other Wall Street banking giants, Morgan Stanley and Goldman Sachs.
In June, he requested documents from a handful of financial institutions -- including Bank of New York Mellon Corp. and Deutsche Bank AG -- that act as trustees for mortgage bond trusts.
And earlier this month he filed a lawsuit against a proposed $8.5 billion settlement between Bank of New York Mellon Corp. and Bank of America.
The deal covers more than 500 troubled mortgage pools issued by Countrywide Financial. Bank of America bought Countrywide in 2008.
According to the lawsuit, Schneiderman alleges that Bank of New York misled and breached its duties to investors.
He has asked a judge to reject the settlement and says Bank of New York should pay penalties and restitution.
Delaware Attorney General Beau Biden also has joined the fight against the proposed deal.
On top of his own investigation, Schneiderman has come out against the ongoing settlement negotiations, particularly the issue of liability releases.
The nation's top lenders say they want protection from additional claims over and investigations into their mortgage practices.
Servicing, Schneiderman contends, is at the center of the proposed $20 billion deal with the banks.
And he's not the only attorney general to argue the point.
Nevada's Catherine Cortez Masto last week said she was going to be "cautious" about whether to sign a settlement with the five banks, especially if it could impact her state's own litigation.
Like Schneiderman, Masto is conducting her own foreclosure investigations.
And she's not the only one to be wary of the settlement.
Biden and Massachusetts Attorney General Martha Coakley both have said they would hesitate signing a deal that could protect the banks from continuing mortgage investigations.
But when will the deal get done?
The probe began in October with inquiries into so-called "robosigning" practices by several mortgage companies, and has since broadened into identifying and addressing additional alleged improper foreclosure practices.
A spokesman for Miller told Radio Iowa Tuesday that it is still unclear how long it will take to reach a settlement with the banks.
"It's a very complicated case. There are a lot of moving parts and there are a lot of people involved," Geoff Greenwood said.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.