Bloomberg News

BofA Said to Get Subpoena From California’s Attorney General

October 21, 2011

Oct. 21 (Bloomberg) -- Bank of America Corp. was given a subpoena by California’s attorney general for information related to the packaging and sale of mortgage-backed securities, a person familiar with the matter said.

The subpoena, delivered Oct. 18, involves mortgage securitization by the Charlotte, North Carolina-based bank and its Countrywide Financial unit, said the person, who wasn’t authorized to speak and didn’t want to be identified

The subpoena follows a decision by California Attorney General Kamala Harris to withdraw from talks among state officials, the U.S. Justice Department and the five largest mortgage servicers.

The attorneys general of all 50 states last year announced they were investigating the foreclosure practices of banks following disclosures that faulty documents were being used to seize homes. A group of attorneys general and federal officials are negotiating a settlement with the lenders, which also include JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co. and Ally Financial Inc.

Several attorneys general are conducting their own investigations of bank mortgage practices and have raised concerns about the scope of the releases that would be included in any agreement.

Shum Preston, a spokesman for Harris, declined to comment yesterday on the subpoena. Lawrence Grayson, a Bank of America spokesman, also declined to comment on it. News about the subpoena was first reported in the Los Angeles Times.

In a Sept. 30 letter explaining her decision to pull out of the global settlement talks, Harris wrote that, “California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated.”

‘All Stages’

Harris wrote that she would continue a probe already begun by a special mortgage fraud task force in her state, designed to “investigate all stages of the mortgage-lending process, from origination to servicing and foreclosures to securitization of loans into investments in the secondary market.”

While discussions with the banks were proceeding, Harris issued a subpoena to Citigroup, seeking more information about mortgage securitization, a person familiar with the matter said in August.

--With assistance from Hugh Son in New York and Joel Rosenblatt in San Francisco. Editors: Michael Hytha, Stephen Farr

To contact the reporters on this story: Greg Farrell in New York at gregfarrell@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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