NEW YORK, Dec 1 (Reuters Breakingviews) - The bumper
foreclosure settlement between 50 U.S. attorneys general and
the major mortgage lenders is still not dead. That may sound
like the start of a Monty Python riff but it is also an apt
description of the latest twist to the year-long battle over
the corners big banks were cutting to evict delinquent
borrowers from their homes.
Massachusetts Attorney General Martha Coakley today
officially broke ranks and filed her own stand-alone suit
against the alleged perpetrators. That might seem to further
crack the unified front by the nation's states engaged in
negotiations with big mortgage servicers, but it hasn't yet
torpedoed their joint efforts. In fact, the suit could breathe
new life into negotiations.
The suit accuses Bank of America, JPMorgan, Citigroup,
Wells Fargo and GMAC of engaging in deceptive and illegal
practices in the foreclosure and loan modification process. It
certainly casts a long shadow over the prospects of a broad
settlement to end the foreclosure fallout once and for all.
After all, Coakley is hardly a renegade AG, so her suit could
embolden simpatico attorneys general to follow her lead.
Several have already been working hard to make sure banks
don't get off the hook too easily, including New York's Eric
Schneiderman, Nevada's Catherine Cortez Masto and Delaware's
Beau Biden. The banks want any settlement to go beyond just
foreclosure to give them cover against claims on other
mortgage-related practices.
But the prospect of multiple lawsuits rather than one
blanket settlement could be just unpalatable enough to cajole
banks to soften their stance. Lawsuits are messy affairs. Banks
are already suffering from anemic profits and tarnished
reputations and may prefer to avoid the extra cost and
publicity of multiple settlements or, worse, trials, dragged
out over time.
Iowa Attorney General Tom Miller, who is leading the
broader settlement talks, still sounded optimistic on Thursday
that a broader deal could be reached soon. It may be that the
Massachusetts suit is just what negotiations needed to seal the
deal.
CONTEXT NEWS
-- Massachusetts Attorney General Martha Coakley announced
on Dec. 1 that she had filed a lawsuit against Bank of America,
JPMorgan Chase, Citigroup, Wells Fargo and GMAC, accusing the
banks of engaging in deceptive foreclosure practices.
-- In October, Coakley said she had lost confidence in the
settlement talks between the banks and the nation's 50
attorneys general over improper foreclosure practices.
-- Tom Miller, Iowa's attorney general, who has led the
talks between the nation's top lawyers and the banks, said on
Dec. 1 that he still hopes Massachusetts will join a broad
settlement.
(Reporting by Agnes T. Crane, a Reuters Breakingviews
columnist. The opinions expressed are her own.)
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