The lawsuit named Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and GMAC. It was filed in Massachusetts by Attorney General Martha Coakley.
“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 Coakley in a press conference to announce the lawsuit.
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.
The complaint claims the banks violated Massachusetts law with “unlawful and deceptive” conduct in the foreclosure process, including unlawful foreclosures, false documentation, robo-signing, 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.
With Massachusetts breaking from the pack, expect more states to do the same. Of particular note is hitting MERS with a lawsuit: if they are found liable (or if any of the banks are) the floodgates open and the banks are going down. The issue could very well go before the Supreme Court as well.
On the other hand, the way Europe is going and given all five banks are majorly exposed right now to European bond markets, none of them may be around if the euro implodes.
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