Massachusetts AG Martha Coakley has sued not only five lenders, but MERS, the robo-signing agency for all the big lenders. And, on expected grounds: MERS violates state law on paper trails for mortgages and related issues.
And, there's bigger issues yet behind all of this:
Officials at all of the banks issued statements saying they would fight the suit. Most of them also indicated dismay that Massachusetts had taken action during negotiations to reach a settlement over the types of practices highlighted in the case.
“We are disappointed that Massachusetts would take this action now,” said Tom Kelly, a Chase spokesman, “when negotiations are ongoing with the attorneys general and the federal government on a broader settlement that could bring immediate relief to Massachusetts borrowers rather than years of contested legal proceedings.”
Lawrence Grayson, a Bank of America spokesman, said: “We continue to believe that collaborative resolution rather than continued litigation will most quickly heal the housing market and help drive economic recovery.”
And Vickee Adams of Wells Fargo said, “Regrettably, the action announced in Massachusetts today will do little to help Massachusetts homeowners or the recovery of the housing economy in the Commonwealth.”
But as Ms. Coakley made clear during the news conference, her office had come to view as unacceptable the negotiating stance taken by the banks in the protracted settlement talks.
“When those negotiations began over a year ago, I was hopeful that we would be able to reach a strong and effective solution,” she said. “It is over a year later and I believe the banks have failed to offer meaningful relief to homeowners.”So, now, the first AG, more than in Nevada, is breaking ranks from settlement talks. It's clear banks are hoping two things:
1. Campaign cash for Obama (or Romney, or both) and high-dollar-level electoral politics, will get the feds to push harder on a mortgage issues settlement that favors big and predatory lenders.
2. They can run out the clock on some things, on statutes of limitations, and probably "scrub up and clean up" on others.
And, even if Coakley ran a lame Senate campaign in 2010, she now has become, for now, at least, the biggest political player in 2012.
Read and parse carefully words by Obama substitutes on this issue, including which substitutes he chooses before speaking himself.
Meanwhile, we've had the first fallout. GMAC is abandoning any new MERS-based mortgages in the state and other "brokered" mortgages, which Massachusetts (rightly) calls an admission.