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Banking Law

NY Position Snags Multistate Effort to Forge Bank Deal over Foreclosure Practices

Posted Aug 25, 2011 8:47 AM CDT
By Debra Cassens Weiss

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New York Attorney General Eric Schneiderman is no longer on a multistate committee trying to reach a deal with banks over foreclosure practices.

Schneiderman was “booted” from the committee on Tuesday as disagreements emerged, the Washington Post reports. Schneiderman is focusing on a recovery for investors who bought securitized mortgages as well as borrowers victimized by foreclosure abuses, according to the Post and the Wall Street Journal (sub. req.). His position is at odds with that of several other state officials who want the settlement to address only borrower claims.

Schneiderman fears a settlement that excludes investor claims will interfere with his ability to pursue separate actions on their behalf. Some state attorneys general say that concern is overblown, and Schneiderman’s focus on a joint investor and consumer deal will delay settlement and complicate negotiations.

The Wall Street Journal spoke with one state official who disagrees with Schneiderman. "This multistate [effort] is about robo-signing,” the official said. “It's about servicing. We're interested in helping homeowners and preventing foreclosures. We're not interested in helping hedge funds or other private investors recover their losses."

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