'Fat Chance!' Says NY AG To BofA On $8.5B 'Crappy MBS' Settlement; Uses Martin Act In Effort To Jam Banksters Over Securitization Screw-Ups

The Huffington Post reports:

• New York Attorney General Eric Schneiderman asked a state judge to reject a proposed $8.5 billion settlement agreement over soured loans between Bank of America and a group of investors, claiming in court documents that a separate bank representing the investors committed fraud for failing to ensure that the mortgage securities were created in accordance with state law and for failing to act in the investors' best interest.



• Bank of New York Mellon, the trustee representing the investors, "knowingly, repeatedly, and consistently" misled investors into thinking that the mortgage bonds were created properly, Schneiderman said in court documents. BNY Mellon also put its own interests before those of the investors it's supposed to represent, he said.



• BNY Mellon, the 11th-largest U.S. bank by assets and one of the nation's largest trustees, stands accused of "repeated fraud and illegality," according to court filings, which alleges that the abuses "were repeated literally hundreds of times."

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• "If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever," Adam J. Levitin, a bankruptcy expert and professor at Georgetown University Law Center, told a congressional panel last November. Levitin said the problem could "cloud title to nearly every property in the United States" and could lead to trillions of dollars in losses.



• In a New Jersey bankruptcy case last year, a Bank of America executive, Linda DeMartini, testified that Countrywide routinely did not convey crucial documents for loans sold to investors.

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• In court documents, Schneiderman is demanding that his agency be allowed to further examine loan documents to ensure the securities were properly created. New York's top law enforcement officer is using the Martin Act, a powerful state law that gives prosecutors broad powers to investigate fraud.

For more, see New York Attorney General Accuses Bank Of New York Mellon Of Fraud, Moves To Block Bank Of America's Mortgage Deal.

Go here for the New York AG's Pleading In Intervention.

See NYS Martin Act May Provide Manhattan DA With Noose Feds Lack To Be Fitted Around Banksters' Necks for an earlier post on the potency of the New York State Martin Act.

Thanks to Deontos for a copy of the NY AG's pleading.