Foreclosure lawsuits filed against nation’s fives largest mortgage servicers
State officials from Massachusetts are bringing foreclosure lawsuits against the nation’s five largest mortgage servicers for allegedly pursuing illegal practices and misleading troubled borrowers.
The banks are making an effort to reach a settlement over the firms’ foreclosure and mortgage-servicing practices by negotiating with a coalition of attorneys general. Massachusetts Attorney General Martha Coakley is hoping to increase the pressure on the banks by suing.
This action could widen a rift between the states involved in the talks and other states, including California, that already believe the discussions may be headed in the wrong direction.
Coakley defended the lawsuits, noting the action was necessary because “the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law.”
The lawsuit names Bank of America corp., JP Morgan Chase & Co., Citigroup Inc., Wells Fargo and Co. and GMAC. It specifically targets the banks’ practice of “robo-signing” mortgage documents.
“Robo-signing” is false and forged execution of foreclosure documents
“Robo-signing” is a term widely used by consumer advocates to describe the robotic process of the mass production of false and forged execution of legal documents related to mortgage foreclosures and legal matters that are created by persons without knowledge of the facts being attested to.
“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,” Coakley said after the announcement of the lawsuit.Coakleynoted the banks have had more than a year to “show accountability for this economic mess.”
The banks had been hoping to put the issue behind them, reaching a blanket agreement with prosecutors. These lawsuits, and potential similar lawsuits that could be brought by other states, could be the first phase in a larger legal battle that the banking institutions had hoped to avoid.
“This could put pressure on banks and lead to a stronger settlement for homeowners,” said Lewis Finfer, executive director of Massachusetts Communities Action Network.
Simon Resnik Hayes LLP