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NEW YORK (AP) — Massachusetts sued five major banks Thursday over deceptive foreclosure practices such as the "robo-signing" of documents, potentially undermining negotiations between lenders and state prosecutors across the nation over the same issue.
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.
In April, 2011, the Office of the Comptroller of the Currency, which regulates national banks, issued a report after reviewing foreclosure practices at eight of the largest mortgage servicers. The report cited "inadequate policies, procedures, and independent control infrastructure covering all aspects of the foreclosure process."
The OCC ordered the companies to take steps to correct "inadequate quality control and audit reviews to ensure compliance with legal requirements, policies and procedures," inadequate organization and staffing, "foreclosure documents ... executed under oath, when no oath was administered," and "notary practices which failed to conform to state legal requirements."
The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.
The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.
Happy holidays struggling homeowners! Fannie Mae, Freddie Mac and several large mortgage lenders have pledged not to foreclose on delinquent borrowers during the Christmas season.