AG Harris Announces Mortgage Investigation Alliance – Question & Answer


>>CALIFORNIA ATTORNEY GENERAL KAMALA D. HARRIS:
We can take any questions.>>MALE REPORTER: Ms. Harris, it’s been reported
that a subpoena of B of A, Citi Group, Atlantic Bay, etc., that recently Massachusetts filed
suit against five of the major lenders. When are we going to see California
involved in that? When will you be becoming a part of
this nationwide effort?>>KAMALA D. HARRIS: We just announced that we
are, and we actually have been. I’ve actually been in touch with and in conversations with
Martha Coakely 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, and 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 crossed
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 has resulted to our State and also the focus of our 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 consumer-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 looking at what we can do in terms
of reform. But 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.>>MALE REPORTER: But you pulled out of a nationwide,
or pulled out of an agreement that was being worked on. Doesn’t that weaken any nationwide
settlement?>>KAMALA D. HARRIS: My concern is California,
and 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. And there’s another reason we walked away, and perhaps it’s my bias as
a prosecutor. 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. And 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.>>MALE REPORTER: Attorney General Masto, where
does your State stand on the nationwide settlement….[inaudible speech]>>NEVADA ATTORNEY GENERAL CATHERINE CORTEZ
MASTO: Sure, 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 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 had to do on
behalf of the homeowners of our State, and that was starting our investigations and taking
action, whether it’s civil action or criminal action, and holding people accountable. At
the end of the day, letting the homeowner know that there is justice being done. There
is that accountability piece. Investigations are occuring, 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 they understand we’re going after the individuals to make
them accountable for their actions. So, that’s where we are long-term and we’ll just wait to see
the final terms as they come from the multi-state.>>KABC REPORTER JO KWON: Is there a particular
investigation or case that lists partnership….
[inaudible speech]>>KAMALA D. 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, and it has been a result of also a discussion 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 around our homeowners.>>JO KWON: Do you seek partnerships like this
with other States?>>KAMALA D. HARRIS: Absolutely! And we’ve
been talking with other States, and we have been very open and willing to provide support
to any other States that we can possibly provide 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 to believe, do agree are the Boards of the banks and the CEO’s 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. And 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.>>REPORTER ESMERALDA: Can any of you confirm
that the Latino community is actually the
most affected one in the two States?>>KAMALA D. HARRIS: I mean, I’ll speak for
you, then…. 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 are
about 20% of the homeowner population. So,….>>CATHERINE CORTEZ MASTO: I don’t have a 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. And so, particularly you have to understand 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 fraudulent practices going on.>>CNN REPORTER MICHAEL MARTINEZ: How pervasive
is the fraud?>>KAMALA D. HARRIS: Well, there are various
types of fraud, and 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, and we believe
that the evidence is going to show 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 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
you hear are really pretty, pretty profound. And 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 and, in that process of modification and attempting to get modification, there
are people who are preying on them and telling them 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 is everything
from that to the fraud that we are concerned occurred in connection with origination, with
the servicing, and with securitization.>>MALE REPORTER: From a criminal investigative
side, the Feds had 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 in some of those investigations?>>KAMALA D. 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 as 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 lack of compliance.
In terms of a criminal investigation, as I mentioned, are the Mortgage Fraud Strike Force
in California has focused on a number of issues that include consumer issues and corporate
fraud issues, but also criminal fraud, and 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.>>MALE REPORTER: Have you made any arrests
recently in the State of California?>>KAMALA D. 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 in the context of the discussion we were just
having about scams and fraud at a different level. But I’ll let General Masto
speak about that also.>>CATHERINE CORTEZ MASTO: Sure, you know,
I agree. You know, 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. And so from my perspective, that’s where I started. That’s
what we are going to utilize. If it takes us in the investigations, the evidence indicate
that there’s individuals at higher levels of these agencies that have violated criminal
statutes and our case takes us there, that’s where we’ll focus next. For all of the AG’s,
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,
concerns in areas, and strategies in how they’re attacking this. I can only speak from my perspective,
and I believe my colleagues feel the same way, and I know that General Harris does, and
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 evidence lead.>>MALE REPORTER: How could the Obama Administration
have….[inaudible speech]>>KAMALA D. HARRIS: Well, I believe that the
U.S. Department of Justice, HUD, and a number of Federal agencies are taking a look at all
of this as well. You know, that’s been publicly reported, and it’s part of the conversation
in the multi-state discussion. And, again, I believe that everyone involved….

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