On Thursday, December 1st: “Massachusetts Attorney General Martha Coakley is suing five major US banks for allegedly seizing properties unlawfully and failing to help struggling borrowers keep their homes by lowering mortgage payments.”
AG alleges banks skirted rules, sped foreclosures
It is the first major legal action taken against the nation’s biggest banks since they started foreclosure-settlement negotiations with the 50 state attorneys general in the spring. The talks began after the attorneys general launched an investigation into reports of fraudulent and sloppy foreclosure-related practices by the banks. (…)
Coakley said she was forced to sue because negotiations had stalled. The banks taking part have failed to offer any meaningful restitution, she said, but insist on broad immunity from liability for the nation’s foreclosure crisis.
‘‘They have had more than a year to show they understood their role and their need to show accountability for this economic mess and they failed to do so,’’ she said. ‘‘Whether through the courts or negotiations, we will accept only one result, obtaining accountability from these banks and getting real relief for homeowners.’’
Shortly thereafter, Troubled Asset Relief Program (TARP ) Inspector General Neil Barofsky tweets that GMAC parent company Ally’s behavior is disgraceful:
… and Coakley’s office raised the bar on the “rule of law”:
“In order to do business in Massachusetts, GMAC has to follow the law before foreclosing on homeowners,” Coakley said in a statement. “With today’s action, it appears GMAC has acknowledged it has a problem following those laws and being held accountable for doing so.” – BizSm@rt
… so Ally broadened its threat:
Ally, GMAC’s parent, said “that it plans to limit its purchases of mortgages from lenders across the country. The firm received a taxpayer-funded bailout of about $17 billion during the 2008 financial crisis, and is now mostly owned by the US government.”
Okay. So … after all that, where do the people stand? Forcing accountability by enforcing the rule of law is good. Law suits take forever. The people are losing their homes everyday. Banks continue to hold back on lending, and with this new development, “GMAC is trying to get other big banks to follow suit.”
And what about this? If we the people – the U.S. government, own most of Ally, then isn’t there anything more that could be done to aid homeowners and borrowers during the period of litigation?
The best answers I could find this morning come from Yves Smith at Naked Capitalism, who finds a good comparison in what took place in Georgia in 2003, and has suggestions on how to apply some direct pressure on lenders. With typical candor, she concludes: “The insolence of the securitization industry continues to be astonishing. They act as if they have an imperial right to dictate to governments, and refuse to admit any role in a disaster of their own creation. I hope those of you who do business with Ally close your accounts immediately and tell the bank that it is due to their Mafia style move in Massachusetts.”
For background information, this is great: Le Show Interview with Yves Smith.
Occupy’s next move regarding home foreclosures is here: Occupy Wall Street Goes Home
We at APV hope you have a great weekend.