Foreclosures and Mass. Attorney General make the news

From comes news of:

Massachusetts Attorney General Martha Coakley is suing five major US banks for allegedly seizing properties unlawfully and failing to help struggling borrowers keep their homes by lowering mortgage payments.

The civil lawsuit — filed yesterday in Suffolk Superior Court — targets Bank of America Corp.,Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., and GMAC, a subsidiary of Ally Financial Inc. Also named are Mortgage Electronic Registration System Inc., a widely used mortgagerecording firm, and its parent company.

‘‘Our suit alleges that the banks have charted a destructive path by cutting corners and rushingto foreclose on homeowners without following the rule of law,’’ said Coakley, citing whatshe called their illegal behavior.

It is the first major legal action taken against the nation’s biggest banks since they startedforeclosure-settlement negotiations with the 50 state attorneys general in the spring. The talksbegan after the attorneys general launched an investigation into reports of fraudulent and sloppy foreclosure-related practices by the banks.

[Update…Yves Smith on GMAC’s threat to withdraw its business from Mass.]