Banking, Finance, Society and Economy
Banks starting to face legal sanctions

Massachusetts AG Sues Big Banks Over Unlawful Foreclosures, Homeowner Deception

COMMENTARY

Peter Burgess

Massachusetts AG Sues Big Banks Over Unlawful Foreclosures, Homeowner Deception Well this is very big news. Massachusetts Attorney General (and recent Scott Brown opponent) Martha Coakley is suing five major banks -- JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Ally -- over allegedly unfair foreclosure practices. Bloomberg reports:

[Coakley] accused the banks of engaging in unfair and deceptive trade practices in violation of state law. “The stakes could not be higher at this stage of the game,” Coakley said at a press conference in Boston. “The foreclosure crisis continues to be at the root of the economic mess that we find ourselves in and our inability to turn it around.” State attorneys general across the U.S. have been negotiating a possible settlement with the five banks that would resolve a probe into foreclosure practices that began more than a year ago following disclosures that faulty documents were being used to seize homes. State and federal officials are aiming to reach a deal that would provide mortgage relief to homeowners and set requirements for the ways mortgage servicers conduct home foreclosures and interact with borrowers.

[Y]ou can see a noose tightening around the necks of the banks, who would like nothing better than to strike a deal where AGs release them from liability in return for a nominal fee. Not all the AGs are willing to take that step, as detailed above. And now, Coakley, who has been very good on this issue, is out with perhaps the most wide-ranging lawsuit against the big banks over foreclosure fraud. Recall that some favorable court rulings in Massachusetts, including the Ibanez case, have ruled that banks don’t have standing to foreclose in cases where they improperly assigned mortgages. That is part of the case law in Massachusetts, making it a fertile environment in which to pursue this case.