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Lori Swanson said in a Sept. 9 letter to her counterparts in Iowa and New York and a Justice Department official that the banks "should not be released from liability for conduct that has not been investigated and is not appropriately remedied in any settlement."
Swanson said, for example, that a settlement over mortgage servicing standards "should not release the banks or their officers from liability for securities claims or conduct arising out of the securitization of mortgages or liability arising out of the use of the Mortgage Electronic Registry System."
MERS is an electronic lien registry created by the mortgage banking industry designed to speed up the mortgage recording and transfer process. It has been accused of sloppy record-keeping and worse in its massive computer databases of U.S. mortgages.
Federal and state AGs have been negotiating a settlement with banks over mortgage servicing and foreclosure practices, including "robosigning" and other shortcuts that banks took in their haste to remove borrowers from their homes.
A key sticking point in settlement talks is the scope of a release that would protect banks from lawsuits relating to other aspects of their mortgage practices, like securitization.
New York Attorney General Eric Schneiderman has been vocal in his concern that any deal over foreclosure practices not impede his ability to bring other types of mortgage-related claims.
Iowa Attorney General Tom Miller, who is leading the settlement talks, has said any deal will not release the banks from all civil liability. He also said that it won't release them from any criminal liability.