Massachusetts sued Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and GMAC late last week over deceptive foreclosure practices such as robosigning documents.
The lawsuit also named Mortgage Electronic Registration System Inc. and its parent company as defendants. The company, a mortgage registry database, has been accused of shoddy record-keeping in large numbers of foreclosure proceedings.
“We have two clear goals with this lawsuit — one is to provide for real accountability for the role the banks have played in unlawful and illegal foreclosures, and secondly to provide for real and enforceable relief for the harm that the misconduct has caused,” said Massachusetts Attorney General Martha Coakley.
The complaint claims the banks violated state law with "unlawful and deceptive" conduct in the foreclosure process - including unlawful foreclosures, false documentation, robosigning and deceptive practices related to loan modifications.
The lawsuit comes as talks have been dragging on for more than a year between major banks and the attorneys general from all 50 states over fraudulent foreclosure practices that drove millions of Americans from their homes following the bursting of the housing bubble.
In October 2010, major banks temporarily suspended foreclosures following revelations of fraudulent documents processed by banks. The talks between prosecutors and the banks have been designed to institute new guidelines for mortgage lending nationwide. It was anticipated to be the biggest overhaul of a single industry since the 1998 multistate tobacco settlement.
Coakley said banks have had more than a year to “show accountability for this economic mess,” and have failed to do so. “It’s taken too long,” she said.
Banks had been hoping to put the issue behind them by reaching a blanket agreement with prosecutors. The Massachusetts complaint, and potentially similar lawsuits springing up in other states, could be the first phase of a widening legal quagmire that banks had hoped to avoid.
