Banks to pay Mass. $2.7M in foreclosure accord

Four of the nation’s largest banks have agreed to pay $2.7 million and repair defective property titles to resolve claims that they unlawfully foreclosed on properties in Massachusetts to which they did not hold the mortgages, according to Attorney General Martha Coakley.

The judgment resolves allegations that Bank of America, JP Morgan Chase, Citi, and Wells Fargo Bank violated Bay State foreclosure law and the Massachusetts Consumer Protection Act by illegally foreclosing on residents’ homes when the banks lacked the legal authority to do so.

“Our continued work to address illegal foreclosures in Massachusetts plays an important role in ensuring liquidity in our housing market and providing relief to homeowners who purchased properties with defective titles,” Coakley, who leaves office Wednesday, said in a statement. “This settlement holds these four national banks accountable for violating state law and cutting corners in the foreclosure process.”

It was alleged that the banks’ launch of the foreclosure process before they had the legal authority affected a number of titles in the state. The banks have agreed to assist consumers who make claims that their titles is void from an unlawful foreclosure, according to Coakley.

Of the $2.7 million paid by the banks, $700,000 will be allocated to a fund that will aid consumers, while the remaining $2 million will be paid to the commonwealth's general fund.

Bank of America is the largest bank in Central Massachusetts, with 40 local branches and $3.8 billion in local deposits.