New York stands firm against mortgage lenders

The five largest U.S. banks are in negotiations with state and federal officials investigating the mortgage lenders for fraudulent lending foreclosure practices. But not all state attorneys general are ready to reach a settlement with the banks, who are requesting immunity from further probes after the potential settlement is reached.

New York Attorney General Eric Schneiderman argued that the banks should still be exposed to further investigation even if a deal is made between officials and the lenders. Iowa Attorney General Tom Miller disagreed with Schneiderman, announcing recently Schneiderman was no longer part of the committee working to reach a settlement with the banks, Reuters reported.

The Wall Street Journal reported that Schneiderman wanted to include consumer and investor claims against the banks relating to the packaging of mortgages into securities, not just limit the settlement to foreclosures and mortgage servicing.

Analysts predict Schneiderman's departure will decrease the settlement figure, as less states will be involved in the agreement. According to Reuters, if the banks reach a partial deal with the remaining state officials, more aggressive attorneys general like Schneiderman could force larger settlements from their own investigations.  

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