The Probe on the Mortgage Industry Initiated by the New York AG is Expanding

The Probe on the Mortgage Industry Initiated by the New York AG is Expanding

6/22/2011

 

The probe on the mortgage industry has reportedly been expanded by New York Attorney General Eric Schneiderman, who is not requesting some documents from a couple of financial institutions that acted as trustees for mortgage bond trusts.

Bloomberg News revealed Monday that the New York Attorney General has asked for documents from Deutsche Bank AG and the Bank of New York Mellon Corp.

The news outfit was told by an unnamed source that five to ten trustees were being asked to furnish the New York and Delaware Attorney General’s offices with information. The source said that both states are probing whether the trusts are legal or not.

According to Bloomberg, more than 80% of the trusts are controlled by New York law while the remaining 20% is controlled by Delaware.

In May, Schneiderman started his own comprehensive probe of the mortgage industry, requesting records from Wall Street investment bank giants such as the Bank of America, Goldman Sachs and Morgan Stanley.

The records requested by the Attorney General form part of his “review of factors” that led to the financial crisis in the year 2008.

There are some who say that the New York AG’s request could mean that he is already breaking away from the coalition of state attorneys general that are spearheading the countrywide probe into mortgage foreclosures.

But it appears that he is not the only one who is launching an independent probe. Scott Pruitt, the Oklahoma Attorney General, was also said to be working out his own settlement with mortgage servicers who are currently on the crosshairs of the investigation.

WRITTEN BY:

blakeh@wellsdrew.com