Massachusetts Attorney General Martha Coakley sued five national mortgage lenders Thursday, alleging their foreclosure practices were unlawful and deceptive, a possible setback for broad settlement talks.

All 50 state attorneys general had been negotiating with mortgage lenders on how to settle claims the lenders engaged in improper foreclosure paperwork, but Coakley had earlier said she wouldn't sign an agreement that didn't appease her. The talks were meant to avoid a piecemeal approach where all states sought their own damages from banks for their alleged improper paperwork.

The suit, filed in state court in Massachusetts, names Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial. It also names Merscorp Inc. and its Mortgage Electronic Registration System, or MERS, the system that helped the banks complete foreclosures.

A Citigroup spokesman said the bank has not had time to fully review the suit, but "we have been cooperating with the Attorney General as she has looked into these matters, and believe we have operated appropriately in compliance with existing laws."

A spokeswoman for Merscorp said in a statement that the allegation against it "hangs on broad and ambiguous language from a statute that's over 100 years old" and which it believes doesn't apply. She said the company is confident it complies with Massachusetts laws and "has not engaged in or facilitated any violation of the Commonwealth's statutes, including its consumer protection provisions."

The other defendants weren't immediately able to comment.

The lawsuit said it sought "to hold multiple banks accountable for their rampant violations of Massachusetts law and associated unfair and deceptive conduct amidst the foreclosure crisis that has gripped Massachusetts and the nation since 2007."

The suit alleges the banks were not the lawful owners of mortgages they foreclosed on, a claim that cites a ruling in a Massachusetts court last year. The suit also alleges the banks failed to give borrowers proper notice before foreclosing.

Last year, a Massachusetts judge invalidated two foreclosures in a case known as U.S. Bank v. Ibanez, a ruling that fair lending advocates hailed as validation that the process banks used for securitizing and turning mortgages into investments meant they couldn't foreclose in typical ways.

Late last year, many banks were found to have employed what became known as robo-signers, employees whose jobs were to sign and notarize foreclosure paperwork as rapidly as possible to handle the increasing amount of foreclosures coming from the burst of the housing bubble. Those signatures, however, often said the employees reviewed legal pages they had never looked at, which raised legal questions.

Banks halted foreclosures in many states and began negotiations with law enforcers, hoping to avoid battles in all 50 states by reaching a comprehensive agreement. Since then, foreclosures have slowed and the time needed to complete each has grown dramatically. The banks argue that slowdown impedes the nation's ability to recover from the housing crisis by creating the threat of a flood of foreclosed homes and by keeping homeowners from breaking free completely.

The banks had looked to settle the allegations quickly and broadly, thereby allowing the market to return to a more normal state. A prolonged legal fight across many states would keep foreclosures slow and homeowners unable to restart building their credit, the banks claim.

The talks had stalled when Coakley and others raised some objections to the proposed deals, the Wall Street Journal has reported. Last month, Coakley said she had "lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures."

Iowa Attorney General Tom Miller, who is leading the broad negotiations, said in a statement that Coakley indicated "she is open to joining our settlement effort if the terms adequately address the needs of the people of Massachusetts," adding that "We're optimistic that we'll settle on terms that will be in the interests of Massachusetts."

Coakley will host a press conference later Thursday to discuss the charges.

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