Posted on Thursday, November 4, 2010
Though some of the players will change, the coordinated effort by attorneys general across the country to investigate — and ultimately reshape — foreclosure procedures is not expected to lose momentum because of Tuesday’s election.
Tom Miller, Iowa’s attorney general, who is leading the effort, handily won his eighth term. And newly elected attorneys general in New York and California are lined up to be full participants in the investigation, which was prompted by disclosures in recent months about improper or sloppy paperwork by mortgage lenders and their contractors.
“This is a bipartisan and united effort with a clear mandate,” said Mr. Miller, a Democrat.
One instrumental voice, however, will be missing from the investigation’s executive committee, which includes 13 of the 50 participating attorneys general: Richard Cordray of Ohio, who narrowly lost his bid for re-election to Mike DeWine, a former United States senator.
Mr. DeWine, a Republican, declined to say Wednesday whether he would join the investigation when he takes office in January. “We will take a look at that,” he said in a telephone interview.
During the campaign, Mr. DeWine made other issues his priority, including problems with Ohio’s crime lab, corruption in Cleveland and the new health care law. “When I was out with regular people, shaking hands, very few people would talk specifically about the mortgage fraud issue,” Mr. DeWine said.
Mr. Cordray, the losing Democrat, has successfully sued Wall Street for more than a billion dollars. He has suits pending against GMAC Mortgage, a major lender, and has challenged banks against papering over paperwork omissions and instead address the roots of the problem.
But his advocacy did not translate into a winning campaign issue, said David B. Cohen, a political science professor at the University of Akron.
“Cordray was really at the forefront of the whole foreclosure mess but the inattentive public, which makes up the majority in Ohio and the country in general, wasn’t listening,” Mr. Cohen said. “They were mad at the party in power.”
The foreclosure issue did not make much of a dent in Iowa, either. Mr. Miller’s Republican challenger was Brenna Findley, who focused on what she claimed were lapses by Mr. Miller that allowed sexual predators to go free.
Only one other attorney general seeking re-election besides Mr. Cordray was defeated Tuesday: Democrat Steve Six, of Kansas, lost to Republican challenger Derek Schmidt, a state senator.
“My conclusion is that the multi-state investigation will proceed at the same rate,” said James E. Tierney, director of the National State Attorneys General Program at Columbia and a former state attorney general in Maine.
As claims of faulty paperwork by the banks have mushroomed into a full-fledged (if still fuzzy) furor, there are competing investigations, including by federal regulators. While still in its very early stages, the state investigation seems to have the ultimate goal of making the banks modify more loans instead of foreclosing.
If Mr. Cordray refused to blame the voters for his defeat in Ohio, he also declined to give credit to the banks. Preliminary financial disclosure reports show that direct bank contributions to Mr. DeWine were minimal.
While acknowledging that “there could have been late spending in the last 15 or 20 days that might have affected things,” Mr. Cordray discounted much outside influence.
“The major national banks are closely focused on their own problems and situations,” he said. “I don’t think they were active in my race.”
In the foreclosure hotbed of Florida, defense lawyers were hopeful about the election of Pam Bondi as attorney general. Ms. Bondi, a Republican who has been a frequent legal analyst for Fox News, was a state prosecutor for 18 years.
Bill McCollum, the current attorney general, is investigating several large law firms that are at the center of the foreclosure controversy.
“Bondi’s election presents the possibility for continuation of the aggressive stance taken by McCollum,” said Matthew Weidner, a foreclosure lawyer in Florida. How better to reward the law firms that supported her, he asked, than to end the foreclosure mills and allow new firms to represent the banks in court?
On her campaign Web site, Ms. Bondi prominently mentions mortgage fraud committed by scam artists but does not address the controversy over foreclosure documentation roiling the courts in Florida. In her victory speech, she vowed to stand up against “a federal government health care takeover.” NYT By DAVID STREITFELD