Massachusetts files lawsuit against 5 of nation’s largest mortgage lenders

The Takeaway

Massachusetts Attorney General Martha Coakley has filed a lawsuit against five of the nation’s largest mortgage providers.

Coakley accuses Bank of America, JP-Morgan Chase, Citigroup, Wells Fargo and GMAC Mortgage of “unfair and deceptive business practices.” She is seeking damages for borrowers who were hurt by these banks foreclosure practices, which range from filing fraudulent legal paperwork to the use of so-called “robo-signers” and refusing to follow lending laws.

“Whether those institutions believe they are too big too fail, they certainly have demonstrated they believe they are too big to care about the impact of their actions. We believe they are not too big to have to obey the law,” Coakley said.

Louise Story, Wall Street and financial reporter for the New York Times said many had believed the banks would reach an overarching settlement with all the states, rather than see it go to litigation. The banks are arguing if there is an out-of-court settlement soon, it would be better for homeowners.

“The settlement would include, presumably, some sort of immediate compensation for homeowners across the country,” Story said. “A lawsuit that goes to court takes a lot of time, maybe years, to bring financial compensation.”

Coakley said she had hoped for a settlement but in the year since negotiations started, she’d lost hope that anything meaningful would be reached any time soon.

“That’s why she’s going ahead with her lawsuit,” Story said.

Story said the lawsuit, unless it’s settled, will likely take years to resolve.

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