Massachusetts Attorney General Martha Coakley plans to sue the five biggest banks in the mortgage business over “unlawful and deceptive conduct” in their foreclosure operations. A news conference is scheduled at 1pm ET to detail the charges, which were filed in Suffolk Superior Court.
This is at least the third recent lawsuit from state Attorneys General against banks and affiliated companies for their foreclosure practices. Nevada’s Catherine Cortez Masto sued Bank of America for fraudulent practices related to a prior settlement on Countrywide loans (she also recently filed a 606-count criminal indictment against two LPS employees for robo-signing). And Delaware AG Beau Biden sued MERS, the electronic registry owned by the big banks, for deceptive practices. In addition, New York’s Eric Schneiderman has a wide-ranging investigation into foreclosure and securitization fraud, with a number of subpoenas out for documents. And California’s Kamala Harris just filed subpoenas against Fannie Mae and Freddie Mac over mortgage servicing and securitization.
So you 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.
According to the Boston Globe MERS is also named in the lawsuit:
The suit, filed in Suffolk Superior Court, also names the private company Mortgage Electronic Registration System Inc. and its parent, MERSCORP Inc., as defendants, according to the attorney general’s office.
“The AG’s lawsuit seeks accountability for the banks’ unlawful and deceptive conduct in the foreclosure process, including unlawful foreclosures, false documentation and robo-signing, MERS, and deceptive practices related to loan modifications,’’ the news release from Coakley’s office said.
Coakley’s name has become something of a punching bag in liberal circles because of her losing campaign against Scott Brown for US Senate. If she succeeds in prosecuting banks for foreclosure fraud, that loss could be the best thing ever to happen to the people of Massachusetts. And it should lead to a re-examination of her record.