Mass. expected to join foreclosure abuse settlement
Massachusetts Attorney General Martha Coakley is expected to sign on to a settlement brokered by attorneys general nationwide with five major US lenders over the banks role in the countrys foreclosure crisis, according to a person with knowledge of the discussions who wasnt authorized to discuss the deal publicly.
Coakley and her staff have been negotiating for days with lenders over the pact, which has been months in the making. Massachusetts is one of only a few states that have yet to agree to the settlement, which reportedly could total between $25 billion and $30 billion. The money is being promised by Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citibank, and Ally Financial Inc.
California and New York yesterday agreed to the deal.
The settlement would go toward lowering some homeowners mortgage balances, loan refinancing, a reserve account, and cash payments of about $2,000 apiece to some of those who lost their properties through improperly conducted foreclosures.
California where more than 2 million people owe more to banks than their homes are worth would reportedly get $430 million. Florida would receive $350 million, and Texas is expected to get about $141 million.
It is unclear how much money would go to Massachusetts, where the foreclosure problem, while serious, has been much less severe than in other parts of the country.
A final agreement could be made public as early as Thursday.
Coakley, who was not available for comment tonight, has said she was reluctant to accept the agreement on behalf of the state because she feared it would not provide enough help to troubled homeowners or allow her to pursue claims related to unlawful foreclosure practices in Massachusetts.
But according to the person close to the negotiations, the state yesterday was told it can sign on to the pact without giving up its right to litigate other issues related to the five lenders and how they conducted foreclosures.
In December, Coakley frustrated with the slow pace of the national negotiations involving other state attorneys general sued the five major banks for allegedly illegally taking back properties, filing fraudulent foreclosure documents, and failing to assist borrowers who could have stayed in their homes if they had been allowed to make lower monthly mortgage payments.
She also sued the private Virginia-based lender-created company Mortgage Electronic Registration Systems Inc., or MERS, claiming it was set up to let lenders to avoid state requirements that they record mortgage transfers. She also said the system conceals the true identity of mortgage holders.
Under terms of the tentative agreement, Coakley apparently will still be able to pursue claims against MERS and allegations that banks completed foreclosures here without having the proper paperwork.
Earlier this week, Iowa Attorney General Tom Miller, who is leading the negotiations, said some issues still need be to be worked out by federal, state, and bank officials before a deal is finalized.
Housing advocates said the agreement, while useful, wont solve the countrys foreclosure crisis.
Material from Globe wire services was used in this report. Jenifer B. McKim can be reached JMcKim@globe.com.