MANCHESTER — Executive councilors want the state to aggressively prosecute national firms who may have committed fraud against New Hampshire homeowners when they foreclosed on their properties.

Councilor David Wheeler, R-Milford, told Attorney General Michael Delaney at Wednesday's Governor and Council breakfast before the regular meeting that he wants the state to find a case of such fraud and aggressively prosecute “so this doesn't happen again.”

The Attorney General's Office has $10 million for enforcement under the $43.6 million settlement the state received in a national agreement over illegal foreclosure practices with five banks, Bank of America, Citigroup, GMAC/Allied Financial, JP Morgan Chase and Wells Fargo.

“We ought to have some agreement to pursue some criminal cases,” Wheeler said.

He said he received a call this week from a constituent who paid a substantial sum for a loan modification, made all the monthly payments and recently had his check returned. He was told he was delinquent and foreclosure proceedings had begun.

Delaney said his office wants to add a litigator and two legal assistants to pursue criminal cases against institutions that may have acted illegally.

He told the council he had hoped to bring his recommendations to Wednesday's meeting, but it was not finalized. He plans to have the recommendation ready for the council's Aug. 22 meeting.

Delaney told councilors about $2 million would be set aside for the investigative unit, which would be in place for three to four years.

Help for homeowners who had their properties foreclosed would total $6 million, which would be used equally for counseling on navigating the foreclosure process and for legal help.

Gov. John Lynch said the whole issue is frustrating for councilors, whose constituents call seeking help.

“When errors are made, it is almost impossible to figure it out,” Lynch said. “It's frustrating our constituents continue to be taken advantage of unfairly.”

He suggested the state tell mortgage writers and holders if standards are not followed, there would be a moratorium on foreclosures going forward.

Delaney said the problems are with national, federally chartered banks, not local banks. He said he needs the authority to prosecute financial institutions that use deceptive and unfair practices.

The attorney general's authority to prosecute financial firms for deceptive and unfair practices was taken away about a decade ago when the state's consumer protection laws were rewritten. The authority now rests with the Banking Department and Bureau of Securities.

Delaney noted he was not successful in convincing lawmakers this year to restore the authority to his office.

During the Governor and Council meeting, councilors approved a $500,000 grant from state Community Development Block Grant money to help secure financial backing for a major expansion by Smuttynose Brewing Company.

The company will be moving its operations from Portsmouth to a newly constructed, 40,000-square-foot facility in Hampton. The project is projected to create 25 new jobs.

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Garry Rayno may be reached at grayno@unionleader.com.