City Council votes to support Schneiderman’s investigation of mortgaging practices

September 08, 2011 06:26PM

The City Council today passed a resolution in support of New
York State Attorney General Eric Schneiderman’s investigation into
the mortgage packaging practices of several banks and it calls upon
a taskforce of 50 state attorneys general to preserve his investigatory
and prosecutorial powers, according to New York’s Martin Act, in any
settlement with major financial institutions.

At the end of last month, Schneiderman was removed by Iowa State Attorney General Tom Miller as a leader of a panel
negotiating a settlement with U.S. mortgage servicers
after he was
accused of trying to undermine the work of the group. 

The City Council resolution, sponsored by Council Speaker Christine Quinn, and
Council members Robert Jackson and James Gennaro, notes that
Schneiderman is concerned that settlement by the 50 State Attorneys
General Taskforce would give the major banks too much protection from all
future mortgage collapse-related litigation. That could restrict his
office from proceeding with its current investigation and impede
future investigations or legal action taken in the area of
mortgage security fraud, the resolution states.

It also notes that according to the New York state comptroller’s
office, between 2006 and 2009 the number of foreclosure filings in New
York City rose by 31.7 percent to 22,886. In addition, it notes, a
majority of New York City’s residents are Black, Latino or members of communities that have been disproportionately impacted by the
mortgage crisis.

The resolution also points out that the Federal Bureau of Investigation ranked New York, where
most of the nation’s top financial institutions are located, as one of
the top 10 states for known or suspected mortgage fraud activity for
two consecutive years and ranked New York as one of the top 10
states for reports of mortgage fraud across all originations in 2010.

Schneiderman welcomed the passage of the resolution.

“Homeowners in every corner of New York have been hit hard by the
mortgage crisis, and we must do everything we can to prevent this kind
of economic calamity from happening again,” he said in a statement.
“The leadership of Speaker Christine Quinn and the City Council
reflect our shared commitment to resolving this crisis fairly, holding
those responsible to account, and getting New York’s economy moving
again.”
— Miranda Neubauer