California, Nevada Team Up in Mortgage Fraud Probes

Los Angeles - The attorneys general in California and Nevada said Tuesday they are partnering in investigations into the mortgage meltdown that crippled the two states with the highest rates of foreclosures in the nation.

California Attorney General Kamala Harris and her Nevada counterpart Catherine Cortez Masto said they will combine resources and share information about mortgage fraud probes each have launched in recent months.

"This strong partnership will allow our states to make an even more concerted effort to hold fraud perpetrators accountable and ensure law-abiding homeowners receive justice," Masto said.

Both states were decimated during the economic downturn when housing prices fell and led to a wave of foreclosures. Nevada has the nation's highest foreclosure rate while California ranks second.

Harris recently subpoenaed mortgage giants Fannie Mae and Freddie Mac looking into their lending practices. Masto has indicted two Southern California title officers of running a so-called "robo-signing" scheme to sign and file thousands of fraudulent foreclosure documents in Las Vegas between 2005 and 2008.

Talks have been dragging on for more than a year between major U.S. banks and attorneys general from all 50 states over fraudulent foreclosure practices that drove millions of Americans from their homes during the housing crisis.

Major banks temporarily suspended foreclosures in October 2010 following revelations of widespread deceptive foreclosure practices by banks. The negotiations have been designed to institute new guidelines for mortgage lending nationwide. It was anticipated to be the biggest overhaul of a single industry since the 1998 multistate tobacco settlement.

But attorneys general of different states have disagreed over what terms to offer the banks. In September, California announced it would not agree to a settlement over foreclosure abuses that state and federal officials have been working on for more than a year.

New York, Delaware, Nevada and Massachusetts, which sued five major banks earlier this month over deceptive foreclosure practices, have argued that banks should not be protected from future civil liability.

The decision to partner up would have little impact on the broader 50-state talks, Masto said, but Harris noted her frustration how long the negotiations have taken.

Nevada is not a member of the 10-state executive committee working directly on the deal with the banks but is still receiving information about new developments, Masto said.