A coalition of seven major public pension systems, led by New York City Comptroller John Liu, has asked the boards of four of the largest U.S. banks to examine their mortgage and foreclosure practices.
In a letter dated January 6, the pension fund coalition urged the Audit Committees of Bank of America Corp
This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants, the coalition said in the letter.
Bank representatives could not be reached for immediate comment on Sunday.
On January 7, in a decision that could slow foreclosures nationwide, Massachusetts' highest court voided the seizure of two homes by Wells Fargo & Co and US Bancorp after the banks failed to show they held the mortgages at the time they foreclosed.
That sent fears through the market as investors worried that decision could threaten lenders' ability to work through hundreds of thousands of pending foreclosures.
The Supreme Judicial Court of Massachusetts' unanimous decision upheld a lower court ruling and was among the earliest cases to address the validity of foreclosures done without proper documentation.
That issue, including the use of robo-signers who approved foreclosure documents without reviewing them, last year prompted an uproar that led lenders such as Bank of America, JPMorgan Chase and Ally Financial Inc to temporarily stop seizing homes.
Courts in other U.S. states are considering similar cases, and all 50 state attorneys general are examining whether lenders are forcing people out of their homes improperly.
The pension fund coalition represents more than $430 billion in pension fund investments, including $5.7 billion invested in the four banks.
Liu represents the five NYC pension funds. The coalition also includes the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investment, the Illinois State Universities Retirement System, the New York State Common Retirement Fund, the North Carolina Retirement Systems, and the Oregon Public Employees Retirement Fund.
The coalition called for the banks to report the findings of their independent examinations in their 2011 proxy statements this spring.
At the end of the last year, the coalition's combined holdings in each bank included: 97.1 million Bank of America shares valued at $1.3 billion; 226.6 million Citigroup shares valued at $1.1 billion; 40.7 million JPMorgan Chase shares valued at $1.7 billion, and 50.6 million Wells Fargo shares at $1.6 billion.
(Reporting by Ilaina Jonas; Editing by Tim Dobbyn)