Attorney General Eric Schneiderman said his federal lawsuit against a major mortgage lending corporation and its subsidiaries is the first of many that will be filed by President Obama’s state-federal task force, of which Schneiderman is co-chair.
“It’s not about one deal or 10 deals or 20 deals but the entire course of business,” Schneiderman said during a conference call with reporters Tuesday. “My experience is that there will be more cases to come involving other institutions, and we will continue to work with our federal partners to conduct an efficient, effective investigation.”
The suit, filed against J.P. Morgan Securities LLC (formerly known as Bear Stearns & Co. Inc.), JP Morgan Chase Bank, N.A., and EMC Mortgage LLC (formerly known as EMC Mortgage Corporation), alleges that the former companies misrepresented their monitoring of the stability of their mortgage loans to investors. Schneiderman said their No. 1 priority was to lend more mortgage loans regardless of the borrowers’ ability to pay back the loans.
“The complaint goes to the heart of the misconduct that created the housing bubble and caused the crash of 2008,” Schneiderman said.
“The bad loans are a result of the desperation … of the banks to just get more mortgages of whatever quality so they could keep making money money on the securities,” he continued. “It’s clear that they put the interest of the ability to get more loans ahread of their relationship with investors.”