Calif. Official Asks DOJ To Probe Mortgage Seizure Collusion

Law360, New York (September 10, 2012, 7:20 PM EDT) -- California Lt. Gov. Gavin Newsom on Monday slammed securities investors for alleged collusion aimed at dissuading communities from seizing underwater mortgages by eminent domain and asked the U.S. Department of Justice to investigate whether lending discrimination is being promoted.

Securities firms have discussed boycotting cities that condemn their assets, and have explored blocking the pooling and sale of seized and re-securitized loans in hopes of raising borrowing costs, Newsom said in a letter to Attorney General Eric Holder. The DOJ should examine whether the conduct improperly...
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