Massachusetts Attorney General Martha Coakley today filed a wide-ranging lawsuit in Suffolk County Superior Court in Boston against Bank of America, JP Morgan Chase, Citibank, GMAC, Wells Fargo and MERS, alleging that the defendants’ conduct in foreclosing “hundreds, if not thousands” of mortgages in Massachusetts was fraudulent, unfair, deceptive and in violation of numerous provisions of Massachusetts law.  A copy of the complaint is here (pdf).

In her press release (pdf) announcing the suit, the AG states, “Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law.  Our action today seeks real accountability for the banks (sic) illegal behavior and real relief for homeowners.”  She summarizes the defendants’ key “unfair and deceptive” practices as: 

  • Pervasive use of fraudulent documentation in the foreclosure process, including so-called robo-signing;
  • Foreclosing without holding the actual mortgage (“Ibanez” violations);
  • Corrupting Massachusetts’ land recording system through the use of MERS;
  • Failing to uphold loan modification promises to Massachusetts homeowners.

About her MERS-related claims, the AG says that the defendants have “undermined our public land record system through the use of MERS,” and that MERS was created “primarily to avoid land registration and recording requirements, including payment of recording and registration fees, and to facilitate the sale of mortgage loans.”

In her prayers for relief, the AG requests civil penalties of $5,000 for each violation of Massachusetts’ Consumer Protection Act (M.G.L. c. 93A).  She also seeks an injunction prohibiting the defendants from (1) initiating any foreclosure without first obtaining a valid written assignment of the mortgage or other documentation verifying that it is the holder of the mortgage, (2) publishing or providing any notice that does not identify the current holder of the mortgage, and (3) submitting to any court or Registry of Deeds any affidavit not signed by someone with personal knowledge of its contents, any document not actually signed by the named signatory, any document signed by someone without authority to sign, or any document signed by someone who did not personally appear before the attesting notary.  Last but not least, the AG requests an order that each defendant “take all actions necessary to cure defects in title resulting from” (1) the defendant’s initiation of foreclosure proceedings where it was not the holder of the mortgage or where its published notice did not correctly identify the holder, and (2) the defendant’s failure to register all assignments or transfers of beneficial interests in mortgages secured by registered land.

Strong stuff indeed.  We’ll be closely following the fallout from this frontal assault on the way in which millions of mortgages across the country have been created, securitized, bought, sold and foreclosed for the past 15-plus years.