Transcript of the press conference Q&A on the California & Nevada joint mortgage investigation alliance

Transcript of the press conference Q&A on the California and Nevada joint mortgage investigation alliance (Dec. 6, 2011):


Question: 

“Recently, Massachusetts filed suit against five of the major lenders. When are we going to see California get involved in that? When are you be becoming a part of this nationwide effort?”

 

California Attorney General Kamala Harris:

“We just announced that we are, and we actually have been. I’ve actually have been in touch and in conversations with Martha Coakley, who is the Attorney General of Massachusetts.

“As you know, and I have read about, there are many subpoenas that are out from our state. This investigation and this announcement today of this joint investigation agreement is about joining an effort that is in recognition of the fact that the conduct that we’re talking about is conduct that cross jurisdictional lines, but also recognizing that not all the states are similarly situated.

“California and Nevada were particularly hard-hit as it relates to the foreclosure aspect and to the number of homeowners that we have underwater. In that way, we have a very specific issue in terms of the harm that have resulted to our state and also the focus of our own investigations.

“You can look at the work that we are doing – this combination of Nevada and California – as being motivated, I would say at least speaking for California, by the concern about the consumers -facing conduct, motivated by and focused on the homeowner-facing conduct and what we must do to make sure that there’s accountability and consequence that results from the harm that was created to those homeowners and also look at what we can do in terms of reform.

“To be sure, we invite and are offering to many states and have actually been asked by many states for support, and that support is there and that support will be ongoing.”

 

Question: 

“But you pulled out of a nationwide – you pulled out of an agreement that was being worked on. Doesn’t that weaken any nationwide settlement?”

 

California Attorney General Kamala Harris: 

“My concern is California. When we were at the table during the multi-state negotiations, the discussion in terms of what was being offered was insufficient to really bring a fair deal to California. And that’s why we walked away.

“There’s another reason we walked away. Perhaps it’s my bias as a prosecutor, [but] we need to know everything that happened or enough to be able to evaluate a settlement discussion in a way that can determine that it’s proportionate to the harm and proportionate to the wrongdoing caused our state. That was one of the other reasons that we walked away, because of our need to engage in a more wide-ranging and in-depth investigation of the conduct and then by doing that have a better sense of what is a fair deal for California.”

 

Question: 

“Attorney General Masto, where does your state stand on the nationwide settlement?”

 

Nevada Attorney General Catherine Masto:

“We are actually monitoring it. I have not been privileged to know a lot of the terms. I’m not on the executive committee nor have I ever been. We are all monitoring it to see at the end of the day what the final terms are to decide whether or not it’s beneficial for Nevada to join or not.

“I can tell you right now since 2007 knowing that the multi-state was moving forward that was not going to hinder us from doing what we have to do on behalf of the homeowners from our state, and that was starting our investigations and taking action – whether that’s civil action or criminal action – and holding people accountable. At the end of the day, letting the homeowner that there is justice being done. There is that accountability piece. Investigations are occurring.

“But at the same time, at the end of the day we also want to see some sort of relief for homeowners. If it’s not in the form of monetary relief, I’m hoping that they’d understand that we’re going after the individuals to make them accountable for their actions. So that’s where we are on the long-term. We’ll just wait to see the final terms as they come from the multi-state.”

 

Question: 

“Attorney General Harris, is there a particular investigation or case that this [partnership] sparked from or a case or investigation that this could accomplish?”

 

California Attorney General Kamala Harris: 

“This joint investigation agreement is a result of many conversations that we’ve had and many meetings that we’ve had about specific facts. It has been a result of also discussions that we’ve had that has been very strategic in nature around how we can combine our subpoena power, how we can combine the litigation power that we have.

“As you know, we created in California at the beginning of the year a Mortgage Fraud Strike Force. In creation of that, I took from our consumer fraud, our corporate fraud, and our criminal divisions along with sworn investigators and auditors.

“So the focus has been looking at various phases of this issue that relate to everything from origination to the servicing process to what has happened in terms of securitization. The focus for this joint investigation agreement will be on all of those issues and, in particular, looking at what we can do immediately in a way that results in bringing some relief to our states and our homeowners.”

 

Question: 

“Do you see partnerships like this with other states?”

 

California Attorney General Kamala Harris: 

“Absolutely, and we’ve been talking to other states. We are and have been very open and willing to provide support to any other states that we can possibly provide any support to. I think that everyone who is involved in this discussion would agree that it should be a priority to bring relief to victims of wrongdoing.

“In fact, on that note, I would suggest to you that among those who should, and I would like believe do, agree are the boards of the banks and the CEOs of the banks. I am sure and do believe that they want to make sure that there is consequence and accountability for wrongdoers and that they can get this behind them. We’d like to see it. We’d like to move on beyond that as well, but there’s got to be a meaningful investigation and accountability and consequence.”

 

Question: 

“Can any of you confirm that the Latino communities actually the most affected one in the two states?”

 

California Attorney General Kamala Harris: 

What we know is in California we believe that approximately 50% of the homeowners who are underwater are African-American and Latino in spite of the fact that they’re about 20% of the homeowner population.

 

Nevada Attorney General Catherine Masto:

“I don’t have the specific statistics for you, but I will say obviously in Nevada we have a large Latino population and there is indication that yes they are just as affected in our state as any other homeowner.

“Particularly, you have understand that when we’re talking about a lot of the mortgages in Nevada, 60% of them are held by Fannie or Freddie, and most of them are either serviced by Bank of America because Bank of America and Countrywide were large players in Nevada. So it’s having an enormous impact.

“We do see in our Latino communities and some in the African-American that they were impacted by some of these fraudulent mortgages and these fraudulent practices going on.”

 

Question: 

“How pervasive is the fraud?”

 

California Attorney General Kamala Harris: 

“Well, there are various types of fraud. That’s part of our investigation to answer that very question – how pervasive is the fraud?

“We have seen fraud as it relates to everything from the attorneys that we’re prosecuting, for example in California, Kramer and Kaslow – it’s a law firm. We believe that the evidence is going to show us as that case goes forward in court that their conduct, for example, was pervasive in terms of it was the conduct of lawyers who are charged with working in their clients’ best interests but they weren’t. Their work spanned everywhere from Florida to even in Nevada. So there is that kind of fraud that we believe exists.

“There are other scams that are connected with the modification process. You know, we also have, as General Masto have, been holding town halls up and down the state, and the stories that you hear are really pretty profound. You hear stories that relate to folks who are well-intentioned; they want to keep their home and they’re going through a modification process. In that process of modification and in attempting to get modification, there are people who are preying on them and telling them that they’ve got to pay these extraordinary fees in order to benefit from that process; they’re taking cash from them and they’re not helping them. We hear stories like that all the time.

“We hear stories about people who have been trying to engage in just going through the foreclosure process and understanding it. They don’t understand it and, again, predators come to them who have some financial background, charge them for it, and do nothing to help them keep their home.

“So there’s everything from that to the fraud that we are concerned occurred in connection with origination, with the servicing, and with securitization.”

 

Question: 

“From the criminal investigative side, the feds have struck out on indicting the major players – Countrywide and whatnot – what conversations have you had with the federal government as far as that’s concerned and where can you succeed where maybe they have failed?”

 

California Attorney General Kamala Harris: 

“Well, General Masto and I have talked a lot about our desire and willingness to allow states – and in fact the necessity to allow states – to have enforcement ability around any type of agreement and around any negotiation. It is important, we believe – and Countrywide is an example taught us that – that it is important for the states to be able to have their own enforcement power to do what is necessary, to either force compliance or create accountability for a lack of compliance.

“In terms of a criminal investigation, as I mentioned, the Mortgage Fraud Strike Force in California has focused on a number of issues that include consumer issues, corporate fraud issues but also criminal fraud. We’ll see what the investigation unfolds. I can tell you that we have focused on criminal activity, and we are currently investigating criminal activity but the investigations are not complete so I can’t guarantee where it’s going to end up.”

Question: 

“Have you made any arrests recently in any of these cases?”

 

California Attorney General Kamala Harris: 

“We have a couple of cases, in fact, one most recently out of Stockton that involves criminal charges. It’s not against one of the big banks but it falls more under the context of the discussions that we were just having about scams and fraud at a different level.”

 

Nevada Attorney General Catherine Masto:

“I agree. As the Attorneys General for our state, we use the tools and resources that are available to us and clearly that’s the state laws – any state criminal statutes and civil penalties and statutes. From my perspective, that’s where I start, that’s what we’re going to utilize. If it takes us – the investigations, the evidence indicate – that there are individuals at a higher levels of these agencies that have violated criminal statutes and our case takes us there, that’s where we’ll focus next.

“But for all of the AGs, it’s our limitations by our state statutes that we utilize. It’d be wonderful to have the federal government side-by-side with us. I can’t speak for them. They have their reasons and concerns and areas and strategies on how they’re attacking this. I can only speak from my perspective, and I believe my colleagues feels the same way and I know Attorney General Harris does. That’s why we’re aligning today to really share the investigative resources that we have and the information to hold individuals accountable – no matter at what level – depending on where the facts and the evidence lead.”

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2 Comments on “Transcript of the press conference Q&A on the California & Nevada joint mortgage investigation alliance

  1. Pingback: California & Nevada join forces to fight mortgage fraud | What The Folly?!

  2. Pingback: Transcript: California AG Kamala Harris' statement on the joint mortgage investigation alliance | What The Folly?!

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