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NY AG Sues Bank Of America & Others For Shady Tactics

New York Attorney General Eric Schneiderman filed a lawsuit against Bank of America, JP Morgan Chase and Wells Fargo yesterday for using "false and misleading information" to foreclose on properties.

Specifically, the AG's office is alleging that the banks abused a private, electronic national mortgage registry system called MERS to accelerate foreclosure proceedings when it had no authority to do so, and use "non-employee 'certifying officers' to execute vital legal documents" which "confused, misled, and deceive homeowners and the courts." Information that was once part of the public record is now shrouded under the auspices of big banks that taxpayers bailed out.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Schneiderman says in a statement. "Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions…Our action demonstrates that there is one set of rules for all—no matter how big or powerful the institution may be—and that those rules will be enforced vigorously."

This summer Schneiderman, along with a handful of other attorneys general, faced immense pressure from the White House and the banking industry to accept the terms of a sweetheart deal to settle toxic mortgages for pennies on the dollar and prevents investors from suing.

Now, the political tides have turned—President Obama made assistance to homeowners a focal point of his State of the Union address, and appointed Schneiderman to lead a mortgage crisis unit. It remains to be seen if the panel will produce any meaningful results but it's a turn from the "just play ball" stance the administration was pushing before.

The banks involved declined to comment to the Times, but a statement for MERS read, “We refute the attorney general’s claims and will defend the case vigorously in court.” We can't wait.

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