Obama: New Unit to Target Mortgage Abuses of Crisis

In his state of the union address, President Obama said he will ask Attorney General Eric Holder to create a new unit of federal and state prosecutors to expand a probe into abusive practices by mortgage lenders “that led to the housing crisis.”
The new effort to review the questionable – and possibly illegal – issuing and securitization of risky subprime mortgages is separate from an existing investigation by state attorneys general into the so-called “robo-signing” of falsely processed foreclosures documents.
More than a million foreclosure victims reportedly will be compensated and their mortgages refinanced or principals reduced under a draft settlement that has yet to be finalized with the five biggest lenders.
The president’s new team of prosecutors will focus on the larger-scale mortgage abuses.
Eric Schneiderman, the New York attorney general, will head the new “Unit on Mortgage Origination and Securitization Abuses,” according to a report in the Huffington Post.  The unit will focus on misconduct by lenders and others that led to the housing market collapse four years ago.
“… I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis,” Obama said in his state of the union. “This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.”
Some state prosecutors and consumer groups, including Schneiderman, have expressed discontent with the pending settlement in the “robo-signing” scandal. They contend that more investigations are warranted and that any settlement should not impede future legal actions against the banks.
“The goal of this joint investigation will be threefold: to hold accountable any institutions that violated the law; to compensate victims and help provide relief for homeowners struggling from the collapse of the housing market, caused in part by this wrongdoing; and to help us finally turn the page on this destructive period in our nation’s history,” reads a White House document, according to the Huffington Post.

Leave a Reply

Your email address will not be published. Required fields are marked *