* Mass to sue big banks on foreclosure issues
* AG "lost confidence" in multi-state agreement
* States that pull out could still benefit from settlement
Oct 5 Massachusetts on Wednesday said it is
preparing to sue big banks related to unlawful foreclosures,
dealing another blow to the multi-state talks aimed at
resolving those investigations on a national scale.
"I have lost confidence that the banks will bring to the
table an agreement that properly holds them accountable for
wrongful foreclosures," Massachusetts Attorney General Martha
Coakley said in a statement.
Federal and state officials met with representatives of
several large U.S. banks this week with hopes of reaching a
deal in the coming weeks.
Mortgage servicing units of Bank of America Corp (BAC.N),
JPMorgan Chase & Co (JPM.N), Wells Fargo (WFC.N), Citigroup
(C.N), and Ally Financial are accused of coping with an
unexpected deluge of mortgage defaults beginning in 2008 by
cutting corners and unlawfully rushing through foreclosure
A settlement with all 50 states and federal authorities
could help the banks move beyond the legal fallout that has
dogged them since the peak of the financial crisis.
But the long-running talks -- which will hit the one-year
mark later this month -- have been plagued from the start with
criticism from states concerned about the extent of the legal
immunity the banks have sought.
Last Friday, California pulled itself from the negotiating
team and said the deal under discussion would not provide
enough relief to the state's homeowners.
Though Massachusetts is not part of the team negotiating
the larger settlement, Coakley has in the past expressed
reservations about the direction of the talks.
In July, her office said it was investigating unlawful
foreclosures, and examining whether creditors failed to
establish whether they had the right to foreclose on a home
before doing so, or whether they filed false or misleading
documents in connection with a foreclosure.
Her office was examining whether the electronic registry
used to track the ownership of mortgages during the height of
the housing boom, MERS, conformed to state law.
On Wednesday, Coakley said her office is "aggressively
proceeding" with those efforts and is prepared to file lawsuits
"We have begun preparing for litigation," Coakley said.
People close to the multi-state talks have told Reuters a
settlement is possible without all states signing on.
Even if a state isn't a signatory to a final deal, its
residents could benefit.
The bulk of any settlement -- some 70 to 80 percent -- is
expected to settle federal claims, and that pot is expected to
be used by banks to provide relief to struggling homeowners
across the country.
(Reporting by Aruna Viswanatha; Editing by Gary Hill)