A new lawsuit filed by Massachusetts against certain investment banks over their Mortgage Servicing activities, was described in a post here on December 4, 2011. See "Is The S.E.C. Too Big to Fail?", posted December 4, 2011.
On Friday, December 2, 2011, newspapers reported that Massachusetts had filed a Complaint the day before against major investment banks over their alleged Mortgage Lender/Servicer unfair and deceptive business practices. See, e.g., Gretchen Morgenson, "Massachusetts Sues 5 Major Banks Over Foreclosure Practices" p. B1, col. 2 (New York Times Nat'l ed., "Business Day" Section, Friday, December 2, 2011). The investment bank defendants in that case include Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and GMAC Mortgage. MERS, or Mortgage Electronic Registration System, Inc., a corporation set up and funded by investment banks as their alternative to public recordkeeping of Mortgages, is also a defendant as is its 'parent corporation'.
As noted, one of the defendants is GMAC Mortgage. It immediately decided to stop all of its Mortgage Servicing activities in Massachusetts that resulted in the claims alleged in the lawsuit. Reportedly, however, GMAC Mortgage will continue Mortgage operations in Massachusetts in which it does not provide Mortgage Servicing, i.e., it will continue to make loans to mortgagors directly rather than servicing the mortgages held by others. See "GMAC Ends Most Massachusetts Mortgage Lending After Suit" (Associated Press Copyrighted Story published on Friday evening, December 2, 2011 in the Los Angeles Times Online).
Possibly a good business move. Possibly too late? Will GMAC Mortgage's move affect the outcome of the Massachusetts lawsuit?
Time will tell.
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