Two state attorneys general are investigating Wall Street's bundling of mortgage loans into securities to determine whether they were properly documented and valid, according to an article today leading the Business Day section of the New York Times by Gretchen Morgenson.

"The investigation is being led by Eric T. Schneiderman, the attorney general of New York, who teams with Joseph R. Biden III, his counterpart from Delaware. Their effort," the article said, "centers of the back end of the mortgage assembly lines- where the banks serve as trustees overseeing the securities for investments - according to two people people briefed on the inquiry who were not authorized to speak publicly about it."

"The attorneys general have requested information from Bank of New York Mellon and Deutsche Bank, the two largest firms acting as trustees. Trustee banks have not been a focus of other investigation because they are administrators of the securities and did not originate the loans or service them. But as administrators they were required to ensure that the documentation was proper and complete," the article said.

"Some of the nation's biggest mortgage services are currently in negotiations with a group of state attorneys general to settle an investigation into foreclosure abuses. The new inquiry by New York and Delaware indicates the big banks' troubles may not end even if a settlement is reach in the foreclosure matter. The stakes are potential high. If the trustees did not follow the rules set out in the prospectus, they may be liable for breaching their duties to investors who bought the securities. That could expose the banks to costly civil litigation," the article said