LAS VEGAS - Nevada used the leverage of a federal lawsuit it has pending against one large bank to reach a "side settlement" and gain a larger slice of a nationwide foreclosure settlement pie, state Attorney General Catherine Cortez Masto said Friday.
The $750 million worth of Nevada-specific mortgage relief and cash payments from Bank of America Corp. represented about half the $1.5 billion that troubled Nevada mortgage-holders and the state stand to receive in the nationwide settlement announced Thursday between 49 states and five large lenders.
"I was not about to sign on to any settlement that would release Bank of America for its obligations and its wrongdoing in the state of Nevada," Masto told reporters Friday, the day after attorneys general in 49 states announced the $25 billion national agreement with mortgage lenders also including JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.
Masto said Nevada's negotiations with Bank of America went late Wednesday before she agreed to sign.
"We were committed to bringing them to the table and forcing them to work with us to engage in immediate relief for homeowners of this state," she said." "We have done that."
The bank didn't acknowledge wrongdoing in the settlement, which has yet to be submitted for review by a judge. Lawyers representing Bank of America didn't immediately respond Friday to messages.
Analysts tally about 100,000 foreclosures since 2007 in southern Nevada, and say another 400,000 homeowners currently owe more than their houses are worth. Estimates are that property owners in Las Vegas and surrounding Clark County lost $91 billion in equity over the last four years.
Masto acknowledged criticism that mortgage holders who lost homes months or years ago may derive little benefit from payments that officials say could average up to $2,000.
"Hopefully this is something that's going to help them," she said. "But this settlement should not be looked at as a global relief for all the homeowners, or a fix for our economic woes."
"We're still pursuing lawsuits," she said, "We're still holding individuals accountable."
The Bank of America civil lawsuit was filed in 2010 in state court in Las Vegas and moved in 2011 to U.S. District Court in Reno.
It accuses Bank of America and Countrywide Financial Corp., which Bank of America acquired in 2007, of widespread deceptive trade practices during the recession.
It alleges that Countrywide misrepresented mortgage loan terms to lure homeowners into loans that they did not understand and could not repay.
Masto said the banks in the nationwide settlement agreed to reduce loan principal amounts and facilitate short sales in Nevada, suspend some foreclosures and pay $90 million that Masto said will fund state consumer protection and mortgage fraud enforcement.
"Because we were able to enter into this side agreement," Masto said, the state got money "to help Nevadans and fund aggressive enforcement and outreach actions."
Masto said the Bank of America deal also promises 25 percent more homeowner mortgage modifications for homeowners in the state.
Lenders in the national agreement must consider modifying loans with distressed homeowners before beginning foreclosures and let borrowers appeal denial of a loan modification. Mortgage servicers are required to provide homeowners with a single contact and easier methods to check the progress of loan modification applications.
Homeowners who were previously denied assistance will be eligible for relief, Masto said, and lenders won't be immune from private legal action by individuals.
"Part of the national settlement which was important to all of the states is to change the conduct of the banks, and that's what we have done with these national servicing standards," the attorney general said.
She also pointed Friday to key provisions of the national settlement that she said give state attorneys general oversight of the banks for the first time.
"Loan servicers will be held to strict timeliness in dealing with distressed homeowners," Masto said, calling the agreement "just a beginning, not the end, to hold big banks accountable."
Masto said Nevada will be part of a committee overseeing implementation of the 49-state agreement, and she promised to continue investigations leading to civil and criminal actions stemming from mortgage fraud allegations.
Masto said investigators are working on more than 15,000 fraudulent loan modification complaints against 306 companies in the state, and Masto noted that attorney general investigators served investigative subpoenas in 2010 at offices of lenders Fannie Mae and Freddy Mac - companies that Masto said hold about 60 percent of the mortgages in the state.
