The Department of Justice believes that it has worked out a good settlement with the nation’s biggest lenders to resolve allegations of foreclosure fraud and the robo-signer fiasco, and both parties are preparing to sign the agreement. Not, however, with the blessing of all 50 state attorneys general, which could create a major roadblock for the deal. Part of the $20 billion mortgage settlement deal requires the AGs to “release banks from legal claims in state investigations and law suits.” So far, multiple AGs, led by Massachusetts AG Martha Coakley, have announced that they will “oppose the inclusion of the issues surrounding MERS in any deal”. Coakley does not believe that the MERS mess has been adequately addressed, even though MERS recently announced that it would no longer participate in the foreclosure process. “From predatory loans to ‘robo-signing’ to servicing fraud, the banks continue to go merrily on their way while the consumers, the real estate industry and the commonwealth of Massachusetts are being cheated,” Coakley has said, adding that until she has “fully investigated” the scope of the MERS problem, “Massachusetts will not sign onto any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct.”
Currently, Coakley is involved in a large-scale investigation into MERS conduct, including asking county registers to provide information regarding MERS property seizures. She fears that since MERS was designed to expedite transfer of notes and, ultimately, to help save money on government fees, it may have “impaired the integrity” of the state recording system thanks to a failure to document loan transfers. MERS has announced that it will cooperate with the probe and reminds the public that “the use of MERS has been litigated in Massachusetts courts and judges have upheld the legality of the MERS business model.”
Do you think that Coakley should resist pressure from the Justice Department on this matter?
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