BOSTON (Legal Newsline) - The Wall Street Journal slammed Massachusetts Attorney General Martha Coakley in an editorial Tuesday, claiming her lawsuit against five national banks is politically motivated.
The editorial says Coakley has grabbed the spotlight for herself rather than wait on a nationwide settlement being negotiated by Iowa Attorney General Tom Miller, and that the housing market is unable to recover because banks can't foreclose on delinquent homeowners and resell the homes.
"Ms. Coakley's lawsuit will delay that process, raising the cost of credit, reducing choices and prolonging the housing recession," the editorial says.
On Dec. 1, Coakley announced her lawsuit against Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and GMAC. She's also suing Mortgage Electronic Registration System, an electronic clearinghouse.
Like the allegations Miller is trying to settle, Coakley focuses on false documentations made during the foreclosure process, i.e. robo-signing. Filings with various registers of deeds provided to her office revealed the pervasive use of mortgage service employees to sign hundreds of sworn statements and affidavits without personal knowledge of the information contained in those affidavits, Coakley says.
"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 illegal behavior and real relief for homeowners," Coakley said
In addition, the lawsuit alleges that these practices were not confined to the foreclosure process, but also used in the assignment, transfer and modification of mortgages secured by property in the state.
"The only thing missing is evidence that any homeowners current on their mortgages were tossed from their homes," the WSJ editorial says.
"Instead, the state focuses on bank procedures specific to Massachusetts and the allegation that MERS, the clearinghouse, didn't file promissory notes with the state's Land Court. Several banks said they were 'disappointed' by the action, GMAC says it will fight the charges and MERS notes its business conduct has been 'repeatedly validated by courts in the state.'"
The editorial adds that rederal regulators are already punishing the banks for sloppy paperwork. More than 2.7 million letters have been sent to notify consumers that their foreclosures can be reviewed, it says.
On Dec. 6, Coakley asked Congress to investigate Ally Financial and its subsidiary GMAC Mortgage. She sent a letter to the chairs of the Senate Committee on Banking, Housing and Urbain Affairs and the House Committee on Financial Services.
She wants a review of GMAC because it is mostly owned by the U.S. Treasury following a 2008 bailout.
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.