Two state attorneys general are investigating Bank of New York Mellon and Deutsche Bank, two of the largest banks charged with checking paperwork related to the securitization of mortgages, a practice which contributed to the financial crisis, the New York Times reports.
The two attorneys general, Eric Schneiderman of New York and Joseph Biden III of Delaware, have requested information from the banks to check that the paperwork from bundling individual home loans into securities was "properly documented and valid." They are focusing the investigation on the "back end of the mortgage assembly lines—where big banks serve as trustees overseeing the securities for investors," according to the Times.
If the investigation reveals that the trustees did not follow outlined rules, they could be subject to costly litigation for breaching their duties to investors who bought the securities. This investigation comes on the heels of others criticizing mortgage foreclosure practices caused by careless paperwork and possible forgeries of legal documents by banks.
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