As street heat and public opinion escalates to "make the banks pay," a number of states are moving aggressively to bring relief to homeowners facing foreclosure and make financial institutions pay for the crisis they created.
On Dec. 6, while grassroots militant actions were breaking out in some 20 states, California Attorney General Kamala Harris and Nevada Attorney General Catherine Cortez Masto declared their states were joining forces to more effectively combat fraud and other misconduct in the mortgage industry at a press conference in Los Angeles.
Nevada and California are the epicenter of the nation's foreclosure epidemic, with first and second place rankings respectively in the nation's foreclosure rate.
"There must be accountability and consequences associated with this crisis," Harris said. "There must be meaningful relief for people in the process of foreclosure and in the process of modifying their home loans." Harris said her state would also be pursuing "lasting reform" in the mortgage industry.
A week earlier, Massachusetts announced it was suing the nation's five biggest mortgage services over foreclosure illegalities.
These actions are widely interpreted as moves to escalate pressure on the nation's largest financial institutions, currently in negotiations with a coalition of state attorneys general being facilitated by the federal government, over mortgage industry abuses.
Harris has said the proposed national settlement - purportedly about $20 billion - is inadequate and grants too much immunity to bank officials.
New York, Delaware, Kentucky and Minnesota have also indicated displeasure with the nature of the proposed settlement and the pace of negotiations, which have dragged on for more than a year. New York and Delaware earlier also struck their own pact to pursue a more comprehensive investigation of Wall Street's role in the mortgage crisis.
Nevada's Masto denounced the cold-blooded activities of both the established financial institutions and fly-by-night outfits offering desperate homeowners relief they cannot deliver.
"Families are being forced out of their homes," Masto said. "This crisis is causing great havoc in the local economy."
In recent months, lenders have stepped up their efforts to foreclose in California and Nevada.
Notice of default filings in California - the initial step in the foreclosure process - increased 17 percent in October to a 13-month high of 29,240, according to Realty Trac.
With a one in every 243 homes receiving a new foreclosure filing, the Golden State had the second highest foreclosure rate in the nation in October. The first place price went to the Silver State, with one in every 180 housing units receiving a foreclosure notice.
Masto this week said she had expanded a criminal probe involving employees of Lender Processing Services, a Florida-based firm and key player in the national dispute over fraudulent foreclosure practices. Two California Orange County loan officers are the ringleaders of the scam.
Masto sued Bank of America last December for breaking a three-year-old agreement with Nevada over predatory lending practices by its Countrywide unit.
Masto's suit, amended in August, accused the nation's largest lender of filing faulty foreclosures against homeowners with pending loan modification requests and raising interest rates of troubled borrowers after promising to lower them.
California's Harris is also investigating Bank of America and its mortgage arm Countrywide Financial, along with Citibank, on their practices selling mortgaged-backed securities in California.
Harris said California is investigating abuses in originating and servicing mortgage loans as well as looking into foreclosure rescue schemes that prey on desperate homeowners "who are trying to do anything and everything to keep their homes."
Paul Leonard, California director of the nonprofit Center for Responsible Lending, told the Sacramento Bee the pact between California and Nevada "brings more firepower to the efforts of both attorneys general to investigate and potentially bring joint litigation against the banks and mortgage servicers."
Both states will be able to share information, witnesses, subpoenaed documents, litigation strategies and other resources.
Photo: Californians protest home foreclosures in front of San Francisco Federal Reserve Bank in 2009. Steve Rhodes // CC 2.0