Attorney: AGs May Turn Hostile to Servicers

A foreclosure task force headed by Iowa Attorney General Tom Miller has taken a cooperative approach to working with loan servicers to date, but a prominent attorney warns that some state AGs may turn hostile toward the industry. Paul Hancock, a partner at K&L Gates, said state AGs "have always been very aggressive in enforcing consumer rights," adding that AGs in high-foreclosure states such as Ohio are under political pressure to "do something" about the problem. Speaking at the Mortgage Bankers Association's National Mortgage Servicing Conference, Mr. Hancock noted that a solid majority of states have elected Democratic AGs. He said there is tension within the AG foreclosure working group between Mr. Miller and other AGs who want to take enforcement action against lenders. "While they are working with the Miller group, they have also started investigations of a large number of lenders," Mr. Hancock said. Those investigations, which focus on loan origination and home foreclosure practices, could lead to contentious litigation, he said.