The midterm elections produced some mixed news for banks that are being investigated in the robo-signer foreclosure mess. The leader of a 50-state investigation into the situation, Iowa Attorney General Thomas Miller, kept his seat, but a key member of the committee was not as lucky. Ohio Attorney General Richard Cordray was considered by many to be at the forefront of the fight against the bank foreclosure process, and he is the only attorney general to actually sue a bank as a result of the crisis.
In early October, Cordray filed suit against GMAC and its parent Ally Financial seeking civil penalties and consumer restitution for every robo-signer's signature that appears on an Ohio home loan document that was not properly vetted. In addition, Cordray also sent letters of warning to the mortgage lending units of JPMorgan (NYSE: JPM), Bank of America (NYSE: BAC), and Citigroup (NYSE: C) seeking a statewide moratorium on foreclosures, which he got from two of the three banks.
In addition to Cordray leaving office, five of the 13 attorneys general on the executive committee of the 50-state foreclosure investigations will be joining him because of term limits or personal decisions to leave the AG office. However, Miller says the investigation will not lose steam over the coming months as new attorneys general take office. Miller said in a statement, "While some members of the multistate group, including a few executive committee members, will change political leadership in January, these changes do not affect the work we are now doing at the staff and leadership level."
With election season now over, it bears watching just how far the state attorneys general are willing to go in pressing this issue. Cordray's loss could ease the pressure somewhat for the banks under investigation, but I wouldn't bet on Miller and the other attorneys general letting this story go away anytime soon.
