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EDITOR’S NOTE: If I was wrong on these pages, if I was the least bit influenced by conspiracy theory proponents, then why are the banks demanding immunity in any settlement with anyone over the mortgages, mortgage practices, foreclosures, and foreclosure practices?

And just how will any settlement cure the corruption of title chains in 100 million real estate transactions UNLESS we recognize that the whole thing was a ruse. That isn’t an opinion. It is  fact. We know that the loans were not really securitized because the notes, mortgages and loan documents were never transported, much less transferred. We know that the loan originator was not lending the money — that it was hapless pension fund managers and other investors who were lending the money. We know that straw-men w became the custom and practice of the industry. How would the banks have liked it if borrowers used straw-men?

The hidden liability here is who will get the shaft when it comes time to refinance or re-sell the home when the title chain does not satisfy even the most basic elements of title analysis?

Bank Foreclosure Deal Held Up Over Liability

By David McLaughlin and Dakin Campbell – Jul 21, 2011 9:01 PM MT

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Delaware Attorney General Beau Biden and New York Attorney General Eric Schneiderman , who are investigating the bundling of mortgage loans into securities, don’t want their probes blocked by a broad settlement of liability. Photographer: Keith Bedford/Bloomberg

A push by U.S. banks to win broad liability releases has become one of the main obstacles in talks to resolve a nationwide probe of mortgage-servicing and foreclosure practices, two people briefed on the matter said.

The mortgage servicers want protection from additional state and federal claims over their mortgage practices as part of reaching a settlement that may exceed $20 billion, according to the people, who declined to be named because the talks are private. The banks are seeking releases that go beyond servicing of mortgages to include lending and securitization of loans, one of the people said.

That effort has encountered resistance from at least two states. Delaware Attorney General Beau Biden and New York Attorney General Eric Schneiderman, who are investigating the bundling of mortgage loans into securities, don’t want their probes blocked by a broad settlement of liability.

Biden said he has “strong reservations” about a deal that provides releases related to practices such as securitization and lending, because servicing is the focus of the nationwide settlement talks.

“We have an investigation going on. It would hinder our ability to do that, so that’s why I have real reservations,” Biden said in an interview.

State attorneys general and officials from federal agencies, including the Justice Department, are negotiating a nationwide agreement on foreclosure practices with the five largest mortgage servicers: Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc.

Setting Standards

Officials are seeking a settlement that sets standards for how the banks service loans, interact with borrowers and conduct foreclosures, according to terms proposed in March. They are also seeking monetary payments. Attorneys general from all 50 states announced their investigation last year after reports that banks were using faulty foreclosure documents.

“Attorney General Schneiderman remains concerned by any settlement agreement that would preclude state attorneys general from conducting comprehensive investigations of the mortgage crisis,” Danny Kanner, a spokesman for the attorney general, said in an e-mailed statement.

Jamie Dimon, chief executive officer of New York-based JPMorgan Chase, said the bank was prepared to go to court if necessary.

“I would do anything to get it done today,” Dimon said July 14 about a settlement, according to a transcript of the company’s second-quarter earnings call. “But we’ve got to get it right. We’re not going to do it and be subject to double and triple jeopardy. We’d rather litigate it.”

Representatives of the banks declined to comment.

‘Hesitate to Release’

Biden said it would be “imprudent” to relinquish claims in areas that haven’t been fully investigated.

“I hesitate to release those claims and those potential liabilities mostly because we’re still in the midst of investigating many of the other related issues,” he said.

Iowa Attorney General Tom Miller, who is leading negotiations for the states, didn’t return a phone message seeking comment after regular business hours.

California Attorney General Kamala Harris is also conducting an investigation into mortgage practices. In May, Harris announced a mortgage-fraud task force that would investigate mortgage lending and the sale of mortgage-backed securities to investors. Shum Preston, a spokesman for Harris, declined to comment about the settlement talks.

To contact the reporters on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net; Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net; David Scheer at dscheer@bloomberg.net.

Tags: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND
Posted in bubble, Corruption, Eviction, securities fraud |