Foreclosuregate: Banks Seek Immunity from Civil Lawsuits

by devteam July 21st, 2011 | Share

I found the timing of this news to be extra interesting. WHY? Because the Consumer Financial Protection Bureau goes live today! Ironic isn’t it?  I’m sure consumer advocates and attorneys everywhere are loving this headline (note sarcasm).  The recovery has to start somewhere….</p


States negotiating immunity for banks over foreclosures</p

By Scot J. Paltrow</p

(Reuters) – State attorneys general are negotiating to give major banks wide immunity over irregularities in handling foreclosures, even as evidence has emerged that banks are continuing to file questionable documents.

A coalition of all 50 states’ attorneys general has been negotiating settlements with five of the biggest U.S. banks that would include payment of up to $25 billion in penalties and commitments to follow new rules. In exchange, the banks would get immunity from civil lawsuits by the states, as well as similar guarantees by the Justice Department and Department of Housing and Urban Development, which have participated in the talks.

State and federal officials declined to say if any form of immunity from criminal prosecution also is under discussion. The banks involved in the talks are Bank of America, Wells Fargo, CitiGroup, JPMorgan Chase and Ally Financial.


Reuters reported Monday that major banks and other loan servicers have continued to file questionable documents in foreclosure cases. These include false mortgage assignments, and promissory notes with suspect or missing “endorsements,” which prove ownership. The Reuters report also showed continued “robo-signing,” in which lenders’ employees or outside contractors churn out reams of documents without fully understanding their content. The report turned up several cases involving individuals who were publicly identified as robo-signers months ago.

Reuters found that such activity has continued even after 14 major mortgage lenders signed settlements with federal bank regulators promising to halt such practices and give remediation to some homeowners who were harmed.

In response to these disclosures, Sen. Robert Menendez (D-NJ), chairman of the Senate Subcommittee on Housing, Transportation and Community Development, and nine other senators sent a letter to federal bank regulators, asking them to disclose information gathered about banks’ foreclosure practices.

“This is especially important given this week’s allegations that mortgage servicers continue to engage in widespread ‘robo-signing’ despite your assurances that the illegal actions would not continue,” said the letter, which also cited a report by the Associated Press.

Several senators on the Senate Banking Committee, including Richard Shelby, the ranking Republican, have faulted bank regulators for not conducting a thorough investigation of the banks’ handling of foreclosures. Six months ago, the Office of the Comptroller of the Currency and other federal regulators conducted brief “examinations” of banks, during which they looked at a sample of only 2,800 loan files.

New York State Attorney General Eric Schneiderman has publicly objected to any wide-ranging grant of immunity by the other states. Schneiderman has launched his own investigations of the banks, including probes of suspected misdeeds in “securitizing” mortgages. Securitization involves packaging large numbers of mortgages into pools and selling securities that give investors income from the mortgages.

Attorney General Schneiderman remains concerned by any settlement agreement that would preclude state attorneys general from conducting comprehensive investigations of the mortgage crisis,” a spokesman said.

Three states’ attorneys general — in Iowa, Illinois and Connecticut — have been designated to handle the states’ negotiations with the banks over protection from civil suits and other issues. Spokesmen for all three declined to comment on the progress of negotiations, or on the evidence of continuing wrongdoing by the banks. But people close to the talks said there is still widespread disagreement over the extent of immunity and the dollar amount of penalties.

The banks involved have declined to comment on the talks.</p


All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs


Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...