Coakley may sue lenders for foreclosure abuses
Massachusetts Attorney General Martha Coakley said she is preparing to sue some mortgage lenders for foreclosure-related improprieties, including allegations that the companies have threatened homeowners with property seizures and unwarranted fees even after granting them permanent loan modifications.
“To the extent that banks are not meeting their obligations, this conduct is inexcusable and my office will work to hold them accountable,’’ said Coakley, who did not name the lenders she is targeting for litigation.
She was responding to a story in yesterday’s Globe that focused on homeowners who have filed suit against Bank of America Corp., claiming the nation’s largest lender agreed to modify the terms of their mortgage loans but continued to hound them for more money and - in some cases - kept pursuing foreclosures. The suit - which includes two Massachusetts homeowners - was filed earlier this year in US District Court in California. The plaintiffs are seeking class-action status for the case.
Bank of America declined to comment on the litigation.
Coakley said she has been investigating similar problems among many major US lenders that do business in Massachusetts. Earlier this month, Coakley said she is no longer confident that settlement negotiations between a group of US lenders and a multistate alliance of attorneys general will be successful. The negotiations began last year following concerns about fraud and sloppy paperwork in lenders’ foreclosure efforts.
Coakley said she doesn’t yet know when she will file new lawsuits against banks.
“It is symptomatic of what seems to be an attitude by the banks that they are going to do what they want to do,’’ she said. “This is not only unfair to consumers, it is unfair to cities and towns. Until we get this fixed, we will not get on the road to a healthy economy.’’
Typically, a loan modification involves the lowering of a borrower’s interest rate, principal, or a combination of both.
Gary Klein, an attorney with Roddy Klein & Ryan, the Boston law firm that filed the Bank of America suit, said it continues to receive calls from panicked Bank of America borrowers who thought they had resolved their mortgage problems, only to find the bank is still pursing foreclosure and other punitive actions.
“These are people who can’t sleep at night because they are at risk of losing their homes and Bank of America can’t get their records straight,’’ Klein said.
Jenifer B. McKim can be reached at email@example.com.