New York's top legal officer is seeking information from Deutsche Bank AG and Bank of New York Mellon about their role as trustees for mortgage-backed securities, an expansion of his probe of mortgage practices, said a person familiar with the matter.

New York Attorney General Eric Schneiderman's office is examining whether the banks fulfilled their administrative duties owed to investors set out in agreements that pool mortgages into securities, according to the source.

This person requested anonymity because of a lack of authorization to speak publicly about the probe.

Kevin Heine, a spokesman for Bank of New York Mellon, declined to comment. John Gallagher, a spokesman for Deutsche Bank, also declined to comment.

The New York Times first reported the inquiry into the role of the trustees. The newspaper also said New York's Schneiderman had teamed with Joseph Biden III, his counterpart in Delaware.

Mortgage securitization deals, which bundle loans into securities, have been blamed for helping to fuel the issuance of questionable mortgages to satisfy a buying binge by investors seeking to take advantage of rising real estate prices. After housing prices dropped and the number of homeowners who defaulted on their mortgages rose, those deals came under scrutiny by investors and regulators.

In these deals, the trustee is usually responsible for maintaining documentation about loans provided by the originator and the mortgage servicer.

Roughly 80 percent of mortgage securitization trusts are governed by New York law, which puts Schneiderman's office in a strong position to investigate the deals, according to the person familiar with the probe. The other 20 percent is governed by Delaware law, this person said.

Schneiderman's office may end up working with Biden on the inquiry into the trustees, this person said.

The inquiry into the role of the trustees is part of a larger investigation led by Schneiderman's office, which has sought information about securitization operations from seven banks and requested meetings with their representatives. It has also sent subpoenas to four mortgage-bond insurers.

Schneiderman's inquiry is separate from an investigation led by a group of attorneys general into allegations of shoddy foreclosure practices by banks and servicers.

That investigation resulted in settlement talks between bank regulators, a coalition of 50 state attorneys general, and federal agencies that included the Department of Justice and the Securities and Exchange Commission.

Schneiderman has been participating in those talks, but he publicly has voiced concern about any deal that would prevent additional investigations into mortgage practices at the banks.

(Editing by Steve Orlofsky)

Deutsche Bank Mortgage