February 17, 2012

Philip A. Lehman, Assistant Attorney General for the Consumer Protection Division of the North Carolina Department of Justice, has issued an “Executive Summary” of the settlement between the state attorneys’ general and the five leading bank mortgage servicers. The last section of the summary, that being Section VII, is the most important, and confirmes the matters in our previous post (below) discussing the limited effect of the settlement:

    ” VII. …Claims based on these areas of past conduct by the banks cannot be brought by state attorneys general or banking regulators. The Release applies only to the named bank parties. It does not extend to third parties who may have provided default or foreclosure services for the banks. Notably claims against MERSCORP, Inc. or Mortgage Electronic Registration Systems, Inc. (MERS) are not released. Securitization claims, including claims of state and local pension funds, and including investor claims relating to the formation, marketing, or offering of securities, are fully preserved. … Of course the Release does not affect the rights of any individuals or entities to pursue their own claims for relief.”

As such, the settlement only precludes actions by state attorneys general for the type of claims which were in their lawsuits which were settled, and has no effect on actions against third-party trustee sale companies (e.g. ReconTrust, Trustee Corps, Regional Trustee Services, Northwest Trustee Services, etc.), MERS, or others who provided “default or foreclosure services”. Claims of individuals are also not affected, which include both affirmative claims and defensive claims in both judicial and non-judicial states.

Jeff Barnes, Esq.,