NY Attorney General Investigating Bank of America over Mortgage Securitization Practices

Bank of America BA, no stranger to controversy, is under investigation by the New York Attorney General over its mortgage securitization practices, the Huffington Post reported Monday. Two people familiar with the matter stated that the new probe could call into question the authenticity of thousands of foreclosures that were associated with B of A. According to the Huffington Post, "The investigation, which began quietly in recent weeks, is part of a larger inquiry that is scrutinizing whether mortgage companies and Wall Street firms took the necessary steps under New York state law when creating mortgage-backed securities, these people said, who requested anonymity because they weren't authorized to speak publicly about the probe." If true, New York Attorney General Eric Schneiderman is stepping forward where many others have not. Consumer advocates have voiced anger and disappointment that some of the biggest companies to orchestrate the financial crisis, including banks of mortgage companies, have escaped without criminal or civil repercussions. The SEC and the Justice Department have been noticeably quiet in their prosecutions. Bank of America has faced particular scrutiny because of its massive size - its the largest U.S. bank of assets - and its role in the housing bubble. The bank also acquired Countrywide Financial in 2008, another company that critics have expressed frustration with. The Huffington Post report notes that "The inquiry could prove explosive: Wall Street's great mortgage securitization machine took millions of home loans and bundled them into securities for sale to investors. If the legal steps that guide securitization -- like taking mortgage documents from one party to another, a critical step under New York law -- were not undertaken, then the investors who bought the bundled loans could force the companies to buy them back, compelling them to eat enormous losses." Mortgage securitization and derivatives were among the biggest factors to contribute to the financial meltdown in 2008.