*Beware The Schneiderman*
**By Lew Sichelman**
***Who is Eric Schneiderman and why is he out to get us? That may soon be the mantra of mortgage market players, if it isn’t already. And soon, very soon, the name Schneiderman could replace the names Cordray and Frank as the Man from the Dark Side who is hell bent to straighten out this business of making and selling home loans.
****If you haven’t heard of Eric Schneiderman, the Harvard law school graduate who is the highest ranking law enforcement officer in New York, the bet here is that you will. After all, the Empire State’s legal offices have been a virtual launching pad for careers in Washington as, among other posts, regulators, legislators, cabinet secretaries, federal judges – even a Supreme Court justice.
****I don’t have any inside information about New York’s top cop’s future intentions. But my guess is that sooner or later, Schneiderman will be pacing the official halls in Washington sooner or later, in one form or another.
****Why should that concern you? Just the other day, the 65th Attorney General of New York announced that he is suing Wells Fargo in an effort to get the bank to honor its commitments under last year’s landmark National Mortgage Settlement.
****At the same time, he announced that his office had reached an agreement to suspend an enforcement action against Bank of America, which has agreed to implement a robust set of systemic reforms intended to ensure that the standards outlined in the Mortgage Settlement are honored throughout his state. If the reforms are successful, it is anticipated that Bank of America will replicate them nationwide.
****“Too many homeowners in our state are facing unnecessary challenges as they fight to keep their homes,” the NY AG said. “While Bank of America has chosen to work with us to take the steps required to adhere to their commitments, Wells Fargo has taken a different path. (But) both of these cases should send a strong message that the big banks must comply with the legally binding Servicing Standards negotiated in the National Mortgage Settlement, or face the consequences.”
****But Schneiderman is hardly a one-trick pony. Here’s a look at his resume since his election in November 2010 as the Empire State’s 65th Attorney General:
****In his first weeks in office, the NY AG launched a new “Taxpayer Protection Bureau” to root out fraud and return money illegally stolen from New York taxpayers at no additional cost to the state. He also bolstered the Attorney General’s Medicaid Fraud Control Unit, which has since already recovered millions for taxpayers. And as part of his effort to crack down on corruption and restore the public’s trust in government, Schneiderman launched a groundbreaking initiative expanding his office’s authority to investigate public corruption involving taxpayer funds.
****And that was just the start. In year one of his watch, Attorney General Schneiderman filed a legal challenge to the discriminatory Defense of Marriage Act to compel the Uncle Sam to treat all New York marriages equally; sued federal regulators to force a health and environmental impact review of proposed gas drilling in the Delaware River Basin, and challenged the Indian Point nuclear power plant’s practices related to high-level radioactive waste storage, earthquake preparedness and fire safety.
****More recently, he’s gone after the smartphone business in an attempt to curb thefts by encouraging the cell phone industry to adopt technologies to deter the rising epidemic of violent incidents of smartphone theft by drying up the secondary market on which stolen devices are sold.
****But more germane to this audience is the fact that Schneiderman has taken a leading role in the national fight for a comprehensive investigation of misconduct in the mortgage market. He has demanded a fair settlement for home owners, one that holds banks accountable for their role in the foreclosure crisis, provides meaningful relief to owners and investors, and allows a full airing out of the facts to ensure that abuses of this scale never happen again.
****Toward that end, the Attorney General filed suit in June against HSBC Bank USA and HSBC Mortgage Corporation for failing to follow state law related to foreclosure actions and the way the companies placed homeowners at a greater risk of losing their homes.
****Attorney General Schneiderman is committed to bringing similar actions against other mortgage lenders who hold borrowers in the shadow docket in defiance of state law, his office says. So be on guard, now and into the future.
Lew Sichelman has been covering the housing and mortgage markets for more years then he cares to remember, starting as real estate editor at the long defunct Washington Daily News and Washington Star newspapers and finishing with a three-decade stint with National Mortgage News. His weekly column, The Housing Scene, is syndicated to newspapers throughout the country.