Four national banks agreed to pay $2.7 million and undertake obligations to repair defective property titles in order to resolve claims they unlawfully foreclosed on Massachusetts properties for which they did not hold the mortgages, the attorney general’s office said.
The consent judgment, entered last week in Suffolk Superior Court, resolves Attorney General Martha Coakley’s allegations that Bank of America, JP Morgan Chase Bank, Citi and Wells Fargo violated the state foreclosure and consumer protection laws by illegally foreclosing on Bay State homes while lacking the proper authority to do so.
"Our continued work to address illegal foreclosures in Massachusetts plays an important role in ensuring liquidity in our housing market and providing relief to homeowners who purchased properties with defective titles," Coakley said in a statement. "This settlement holds these four national banks accountable for violating state law and cutting corners in the foreclosure process."
According to the complaint, Coakley’s office alleged that the four banks ignored Massachusetts foreclosure laws, to include failure to obtain a valid assignment of the mortgage prior to foreclosure. This conduct resulted in void foreclosures affecting the marketability and insurability of property titles throughout the state, Coakley’s office said.
The attorney general’s office is still negotiating a resolution of these claims also alleged against GMAC Mortgage LLC, which filed bankruptcy in May 2012.
Under the terms of the settlement, the banks are obligated to assist a consumer who makes a claim that the title to his or her residence is void from an unlawful foreclosure by conducting a thorough title review, providing curative documents, releasing junior liens held by the banks, and, in cases where consumers do not have title insurance, paying reasonable costs associated with the title cure. In addition, the banks will pay $2.7 million, $700,000 of which will be allocated to the Attorney General’s Local Consumer Aid Fund to provide consumer assistance. The remaining $2 million of the settlement will be paid to the commonwealth’s General Fund.
The complaint initially contained allegations against the banks relating to widespread mortgage servicing abuses and allegations against Mortgage Electronic Registration System Inc. and the banks for violation of Massachusetts law relating to registered land. The allegations relating to registered land were dismissed in November 2012, while the servicing allegations against the banks were resolved in the National Mortgage Settlement, a landmark agreement announced in February 2012.
