Schneiderman Sues BNY; Homeowners Validated; Will Deutsche Bank Be Next?
With one court filing, Attorney General Eric Schneiderman has transformed the mortgage backed securities liability landscape. By intervening and opposing the Bank of America/BNY global settlement of mortgage backed securities claims, Schneiderman served notice to the big banks that they will not be able to cut self-serving deals to escape liability to investors. By suing Bank of New York for fraud at the same time, he reminded banks that they face liabilities for their actions as trustee (as Yves Smith has been pointing out at Naked Capitalism for some time now.) In fact, given that everything Schneiderman alleged about BNY’s actions as trustee (other than the deal with BofA) could be said about Deustche Bank, US Bank, Wells Fargo, and JPMorgan Chase (all as Trustee), are those suits coming?
Schneiderman also put the judiciary on notice: take homeowners seriously when they raise a bank’s right to foreclose because the bank’s papers are likely flawed.
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