The Obama administration has been pressing the states to sign a broad foreclosure settlement with the same five banks Coakley is now suing. Massachusetts and California bolted from those settlement talks in October. The AG’s tough stance makes the White House’s support for bank immunity more fraught than it already was. There are moments when it’s politically safe to appear to be siding with moneyed interests over the landless or soon-to-be landless masses. This isn’t one of them.
The evidence of widespread foreclosure fraud has been swelling for years, and the sloppy paperwork hasn’t been confined to Massachusetts. Homeowners across the country have been losing their properties when the law says they shouldn’t. Things are especially ugly in political battleground states like Nevada, Florida, Ohio, and Michigan.
Banks want as much immunity from botched foreclosures as they can wrangle, since they processed foreclosures with the same assembly line mentality that they used when they were cranking out and trading bad mortgages: They built widgets that favored speed and volume over veracity.
When mortgages were flying out the banks’ doors five years ago, trifling matters like credit scores and income verification were the enemies of profitable quarters. And when those mortgages blew up, banks turned to foreclosure mills to quickly seize properties. Foreclosure paperwork was routinely signed by people who never bothered to read the legal documents. That’s a major problem in states where banks have to file foreclosure paperwork with judges, and in states like Massachusetts, where banks file affidavits swearing that they’ve complied with state foreclosure laws. Coakley’s lawsuit targets such robo-signing habits.
