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 sloppyforeclosure-related practices by the banks.
Most of the lenders named by Coakley said they were disappointed by the suit. They pledgedto keep working toward a settlement with the attorneys general, and talked about their efforts toprevent foreclosures.
‘‘We continue to believe that the collaborative resolution rather than continued litigation willmost quickly heal the housing market and help drive economic recovery,’’ said Lawrence Grayson, a Bank of America spokesman.
GMAC and other defendants vowed to fight the allegations in court.
‘‘GMAC Mortgage believes it has strong legal and factual defenses against these claims andwill vigorously defend its position in court,’’ the company said in a statement.
The suit comes more than a year after the multistate alliance of attorneys general began investigating lenders’ practices following admissions made by so-called robosigners — bank employees who said they signed thousands of foreclosure documents without properly reviewing the paperwork. Major lenders, including Bank of America, temporarily halted foreclosure proceedings to review their practices. The banks later said any procedural problems had been resolved and resumed seizing properties from delinquent borrowers.
While Massachusetts has not been affected by foreclosures as much as some other parts of the country, including California and Nevada, the rate of seizures has picked up this fall. And over the last four years, more than 40,000 homes have been taken back by lenders.
Coakley said she was forced to sue because negotiations had stalled. The banks taking parthave failed to offer any meaningful restitution, she said, but insist on broad immunity from liabilityfor the nation’s foreclosure crisis.
