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New York Working With Delaware on Criminal Foreclosure Probe

Oct. 26 (Bloomberg) -- New York Attorney General Eric Schneiderman is working with his Delaware counterpart, Beau Biden, to investigate what he called possible “criminal acts” by financial institutions tied to the foreclosure crisis.

“This was a man-made crisis -- it was created by regulatory neglect and greed,” Schneiderman said last night in a TV interview.

“Beau Biden, who is the attorney general of Delaware, and I thought we really needed to dig in a little bit deeper,” Schneiderman told MSNBC’s Rachel Maddow. “We’re also looking at the conduct of individual institutions and individuals to see if there were misrepresentations made, to see if there was any fraud committed, to see if criminal acts were also a part of this.”

Schneiderman has been investigating mortgage practices of banks as state and federal officials negotiate a settlement with lenders over foreclosure and mortgage-servicing conduct.

All 50 state attorneys general last year announced they were investigating bank foreclosure after disclosures that faulty documents were being used to seize homes. Negotiations with banks including Bank of America Corp. and JPMorgan Chase & Co. haven’t produced a settlement more than a year since the investigation began.

Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, and Kristin Lemkau, a spokeswoman for New York-based JPMorgan, declined to comment on Schneiderman’s remarks. Joe Rogalsky, a spokesman for Biden, declined to comment immediately.

Schneiderman and Biden have said any settlement with the banks shouldn’t provide liability releases to the companies for matters that haven’t been fully investigated, including the packaging of loans into securities.

To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

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