The California AG's Fight Against Mortgage-Backed Securities

The California Attorney General’s Office has recently taken a more aggressive role in combating the lingering effects of the financial crisis. Specifically, it has focused on the sale of mortgage-backed securities and the corresponding fallout in the housing market. One of the ways the office is targeting mortgage fraud is through use of California’s analogue to the Federal False Claims Act, the California False Claims Act (CFCA). Indeed, in 2011, California’s attorney general, Kamala Harris, created the Mortgage Fraud Strike Force to investigate and pursue those who allegedly engaged in misconduct with respect to mortgage servicing. The creation of the task force and other recent actions taken by the Attorney General’s Office pose significant risk to banks and other large financial companies in the wake of the financial crisis. Attorney General Harris indicated that she would use the CFCA to prosecute some of these actions. For example, the corporate-fraud team within the Mortgage Fraud Strike Force has been tasked with tackling misconduct involving investments and securities, subprime mortgages, and any false or fraudulent claims made to the state with respect to these securities.