Article Courtesy of The Orlando Sentinel

By Mary Shanklin

Published December 23, 2011 

As attorneys general in other foreclosure-battered states step up their investigations into fraudulent mortgage practices by large U.S. banks, some Florida groups are accusing state Attorney General Pam Bondi of being soft on the giant lenders.

Florida's Democratic state senators recently released a video that targets Bondi, a Republican elected to a nonpartisan office. Titled "Ignoring the Florida Foreclosure Crisis," the video contrasts new fraud investigations launched by California Attorney General Kamala Harris with controversial forced resignations of two key mortgage-fraud investigators in Bondi's Fort Lauderdale office.

A coalition of religious leaders, homeowners and others has scheduled events Wednesday in Orlando and Miami that will include calls for an investigation into ongoing mortgage-fraud settlement talks between major U.S. lenders and state attorneys general from across the country — talks in which Bondi is a key player. The coalition, known as PICO United Florida, describes the current negotiations as "deeply flawed."

Meanwhile, Orlando-area members of a faith-based nonprofit group called Focus complain that they have come away from meetings on foreclosure-settlement issues with Bondi representatives in recent months disappointed with what they describe as a seeming lack of interest in foreclosure fraud.

"We wanted to convey the idea that we want her to put pressure on the banks to be positive and forthright with their clients," said Jerry Pena, a community organizer with the Orlando group. "… Her stance was that she didn't feel the banks were as liable as the media portrayed them to be, and people shouldn't have gone ahead and signed the mortgage paperwork, and that they knew what they were getting into."

A multistate group of attorneys general has for months been negotiating a settlement with five of the nation's biggest home lenders — Bank of America, Citi, Wells Fargo, JPMorgan Chase and GMAC — which have been accused of mishandling mortgage applications and loan-processing services. It's unclear when, or whether, the attorneys general will reach a settlement with the companies.

A spokeswoman for Bondi noted that the Florida Attorney General's Office has increased the number of staff assigned to investigating foreclosure-related cases from six under former Attorney General Bill McCollum to 19 under Bondi.

Bondi, as a member of the executive committee of the multistate group negotiating a settlement with the five banks, has as her goal to "remedy the practices that prompted the investigation" and to conclude the talks with a plan that helps resolve the foreclosure crisis, spokeswoman Jennifer Meale said.

Meale said Bondi would support a settlement that reduces some homeowners' mortgage principal — but only in cases where the homeowner was harmed by a lender's or mortgage servicer's unscrupulous practices.

Florida's Democratic legislators complain that the attorney general has failed to represent the state's struggling homeowners in the nationwide settlement talks.

"It seems like she's balancing the interest of businesses with the interest of Floridians when it comes to principal reduction," said state Rep. Darren Soto, D-Orlando. "When you're the AG, you have one interest: Floridians. You're supposed to be the consumer advocate, first and foremost."

With foreclosures again rising across the country in recent months, Florida continues to rank among the five hardest-hit U.S. states. About 44 percent of its mortgaged homes are "underwater," their owners owing more on their loans than the properties are worth, according to a recent report by the research company Corelogic Inc.

The nation's four other hardest-hit states, based on Corelogic's ranking, are Nevada, California, Arizona and Michigan. Unlike Bondi, the top law-enforcement officers in those states have been making news for going after mortgage lenders and loan servicers.

Harris, the California attorney general, withdrew from the negotiating group several months ago because of concerns that any settlement would be too lenient on the banks. She has teamed with Nevada Attorney General Catherine Cortez Masto on investigations involving mishandled documents, shoddy loan servicing, and the bundling of mortgages for sale to investors. Massachusetts' attorney general, Martha Coakley, has said that she, too, has "lost confidence" that any agreement reached by the group would "hold banks accountable for wrongful foreclosures."

Arizona Attorney General Terry Goddard last year filed a lawsuit against Bank of America following a yearlong investigation into that bank's mortgage-servicing practices. And Michigan Attorney General Bill Schuette took the rare step in June of serving criminal subpoenas to out-of-state mortgage processing companies.

Beyond the hardest-hit states, New York Attorney General Eric Schneiderman's office recently said it was conducting a banking probe that could lead to criminal charges against financial executives. The attorneys general of Delaware and Illinois are also conducting probes.

Bondi is best known on the foreclosure front for her office's ouster of two tough mortgage-fraud investigators. In May, her office fired June Clarkson and Theresa Edwards despite exemplary performance reviews. Following accusations that the firings were political, Bondi requested an inspector general outside of her office to investigate the dismissals.

Clarkson told the Sentinel last week that the probe started in August by Chief Financial Officer Jeff Atwater's inspector general is taking longer than expected.

"It surprised me that it's taken so long," said Clarkson, who now works as a law partner in Fort Lauderdale with Edwards. "It is what it is."