Big news

Massachusetts AG Martha Coakley is suing the big banks for mortgage fraud. Be still, my heart!

So you can see a noose tightening around the necks of the banks, who would like nothing better than to strike a deal where AGs release them from liability in return for a nominal fee. Not all the AGs are willing to take that step, as detailed above. And now, Coakley, who has been very good on this issue, is out with perhaps the most wide-ranging lawsuit against the big banks over foreclosure fraud. Recall that some favorable court rulings in Massachusetts, including the Ibanez case, have ruled that banks don’t have standing to foreclose in cases where they improperly assigned mortgages. That is part of the case law in Massachusetts, making it a fertile environment in which to pursue this case.

According to the Boston Globe MERS is also named in the lawsuit:

The suit, filed in Suffolk Superior Court, also names the private company Mortgage Electronic Registration System Inc. and its parent, MERSCORP Inc., as defendants, according to the attorney general’s office.

“The AG’s lawsuit seeks accountability for the banks’ unlawful and deceptive conduct in the foreclosure process, including unlawful foreclosures, false documentation and robo-signing, MERS, and deceptive practices related to loan modifications,’’ the news release from Coakley’s office said.

Coakley’s name has become something of a punching bag in liberal circles because of her losing campaign against Scott Brown for US Senate. If she succeeds in prosecuting banks for foreclosure fraud, that loss could be the best thing ever to happen to the people of Massachusetts. And it should lead to a re-examination of her record.

UPDATE: GMAC is going to take its ball and go home:

NEW YORK—GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices.

The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” ratcheting up the high-stakes mortgage fight there.