Massachusetts to sue major U.S. banks

The Massachusetts' attorney general recently announced the state is suing five of the largest U.S. lenders over unfair and deceptive practices that have led to improper foreclosures. By taking action on its own, the state's lawsuit is making it difficult for federal and other state officials to resolve a separate foreclosure settlement with the banks.

The Boston Globe reported Massachusetts has filed suit against Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and GMAC Mortgage. The state is also taking MERS electronic mortgage registry to court for aiding lenders in their shoddy practices.

Attorney General Martha Coakley told the source that the banks are facing charges of fraudulent legal documentation or failing to modify loans for homeowners, leading to improperly foreclosing on struggling homeowners. Through the use of the MERS system, the banks were able to not register legal transfers properly, enabling their malpractices to continue.

According to CNBC, the lawsuit is seeking civil penalties and restitution for harmed borrowers, as well as compensation for state registration fees that did not get paid. Massachusetts aims to force these banks to be accountable for their actions through permanent injunctive relief. This will force lenders in the future to register their activities in accordance with state law.

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