Bank of America Corp., JPMorgan Chase & Co. (JPM) and three other banks that reached a $25 billion national settlement over foreclosure practices have agreed to pay $25 million to New York to resolve some monetary claims over the use of a mortgage database.
New York Attorney General Eric Schneiderman sued Bank of America, JPMorgan and Wells Fargo & Co. (WFC) in February over their use of the mortgage registry known as MERS, accusing the lenders of deceiving homeowners and conducting improper foreclosures.
The state’s agreement with the three banks, as well as Citigroup Inc. (C) and Ally Financial Inc. (ALLY), was filed yesterday in federal court in Washington. The five lenders agreed in February to a $25 billion settlement with 49 states and the federal government to resolve claims of abusive foreclosure practices. That settlement requires a federal judge’s approval.
Bank of America, JPMorgan, Wells Fargo and Citigroup each agreed to pay $5.9 million to New York, according to the court filing. Ally agreed to pay $1.25 million. Ally and Citigroup aren’t named in New York’s MERS lawsuit. The nationwide foreclosure settlement preserves claims raised against the banks in the New York case and any similar claims that may be asserted against Citigroup and Ally, according to the court filing.
Delaware Attorney General Beau Biden, the first attorney general to sue MERS, reached a similar settlement with the five banks, according to court papers. Biden said in his complaint that the MERS registry, which tracks servicing and ownership rights in mortgages, is deceptive and harms consumers.
Banks Not Defendants
The banks, which weren’t named as defendants in the Delaware case, have agreed to pay a total of $2.5 million to the state to resolve claims for statutory penalties related to the MERS litigation, Ian McConnel, a deputy attorney general for the office, said in an interview.
Delaware’s agreement with the banks doesn’t prevent the state from pursuing claims against the lenders for damages suffered by homeowners as a result of their use of MERS, McConnel said.
Danny Kanner, a spokesman for Schneiderman, said in a phone interview that the New York agreement resolves some monetary claims against the banks. The core claims of the lawsuit will proceed, he said.
“We intend to aggressively litigate this case to finally prohibit the widespread illegal and deceptive practices of the banks set forth in our complaint,” Kanner said in an e-mailed statement.
JPMorgan, Ally, Citigroup
Thomas Kelly, a spokesman for New York-based JPMorgan, and Gina Proia, a spokeswoman for Detroit-based Ally, declined to comment on the settlement. Mark Rodgers, a spokesman for New York-based Citigroup, also declined to comment.
Representatives of the other two lenders didn’t respond to e-mails seeking comment.
The New York agreement precludes the state from seeking penalties of $5,000 for each violation in exchange for the $25 million, according to Kanner. The state will continue to pursue damages incurred by New York homeowners as a result of the banks’ use of MERS, he said. The state will also seek court- ordered changes to it.
The national foreclosure settlement case is U.S. v. Bank of America Corp. (BAC), 12-00361, U.S. District Court, District of Columbia (Washington). The New York case is People of the State of New York v. JPMorgan Chase & Co. 2768-2012, New York State Supreme Court (Brooklyn). The Delaware case is State of Delaware v. MERSCORP Inc., CA6987, Delaware Chancery Court (Wilmington).
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