Massachusetts Attorney General Cites ‘Lost Confidence’ in Banks, May Sue

Massachusetts Attorney General Martha Coakley said she may sue major banks after she “lost confidence” that they will reach an adequate agreement to resolve disputes over foreclosure practices.

Attorneys general from all 50 states last year announced a probe of bank foreclosure practices following reports that faulty documents were used to seize homes. Since then, attorneys general and federal officials have been negotiating a settlement with the five largest mortgage servicers in the U.S. -- Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc.

“I have lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures,” Coakley, 58, said in a statement today. “Because our office for some time has anticipated that result, we have begun preparing for litigation.”

California Attorney General Kamala Harris said last week that she was rejecting a proposed settlement with the banks and would pursue her own mortgage investigation, according to a letter she wrote to the U.S. Justice Department and Iowa Attorney General Tom Miller, who is leading talks for the states.

State Probes

New York Attorney General Eric Schneiderman, Delaware Attorney General Beau Biden and Nevada Attorney General Catherine Cortez Masto are also conducting mortgage-related investigations as settlement talks with the banks continue.

Miller said today that the settlement being worked on will hold the banks accountable “in ways that are unprecedented” and will help struggling homeowners across the country. Further negotiations took place this week in Washington.

“While attorneys general are free to criticize an agreement that does not yet exist, we expect that they’ll soon see the tangible results of our yearlong efforts to address improper servicing and foreclosure practices, and provide relief to homeowners,” Miller said in an e-mailed statement.

Coakley said her office is “aggressively proceeding” with plans to file lawsuits. They would include claims tied to the failure to establish the right to start a foreclosure and the filing of false or misleading documents, she said.

Coakley, who has been investigating a mortgage database used by banks known as MERS, didn’t disclose when or which banks would be sued.

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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