Firm commentary:  Note to California Attorney General Kamala Harris and any California voters:  The following complaint provides a roadmap to the deceptive foreclosure practices implemented against homeowners throughout our state:  http://www.mass.gov/ago/docs/press/ag-complaint-national-banks.pdf.  These practices are occurring on a much greater scale in California.  Courts and legislatures in California have taken no action to prevent this widespread attack on basic property rights and the integrity of our legal system. 

Things are different back east as evidenced by a recent lawsuit:  On Thursday, Massachusetts Attorney General Martha Coakley sued five of the nation's leading lenders over deceptive home loan practices and pursuing illegal foreclosure among its customers. Coakley claims that JPMorgan Chase, Wells, Bank of America, Citigroup and GMAC used fraudulent information during foreclosure proceedings, initiated foreclosure without holding the actual mortgage, and failing to uphold on loan modification promises.

1.        Unlawful foreclosure:

The suit acknowledges that these five banks initiated unlawful foreclosure due to the fact they were not the actual mortgage holders. Only the current mortgage holder can begin foreclosure proceedings on a property.  Coakley says the banks ignored this law and begun foreclose on homes in which they did not hold the mortgage, and therefore had no right to conduct their foreclosure actions.

2.       Deceptive loan modification practices:

No surprise:  these banks mislead homeowners pursuing a mortgage modification about the process, requirements, and availability of this government mandated program. The AG claims the banks failed to achieve timely modifications and strung borrowers along for months on temporary trial periods just to be turned down for permanent assistance. This office has seen homeowners stuck on the trial period for 6-20 months that were ultimately rejected.

3.       Robo-signing foreclosure:

According to the complaint:  "The banks used false documentation in the foreclosure process, including so-called "robo-signing", whereby bank personnel signed affidavits that were untrue, or not based on the signor's actual knowledge. An entity wishing to foreclose on a property must demonstrate it has filed an affidavit in compliance with Massachusetts law." said Coakley.  "Evidence also suggests these practices were not confined to the foreclosure process, but also used in the assignment, transfer and modification of mortgages secured by property in Massachusetts."

4.       Undermining MERS:

The lawsuit details that the five entities have undermined Massachusetts land record system through the use of MERS. These banks adopted the use of this electronic registry system to help find a way around land registration and recording requirements, including fees for recording and registration, and to simple the process of home loan sales. The AG claims this system has a lack of transparency as to which banks have authority to enforce foreclosure and unfairly hides the true owner of the mortgage.

"The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis," said AG Coakley.  "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."