A series of recent actions in the Commonwealth of Massachusetts seems to be sending a message to mortgage firms that they aren’t welcome there, and at least one third-party lender is heeding the warning.
Massachusetts Attorney General Martha Coakley is on a mission.
The failed senatorial candidate filed a lawsuit Thursday against the nation’s biggest mortgage servicers — including Bank of America Corp. JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A. — claiming that they used fraudulent documents in the foreclosure process, filed foreclosures without having title to the loans and skirted state recording requirements and fees.
A day earlier, Coakley boasted about a $50 million settlement with RBS Financial Products Inc. over its alleged role in abusive subprime lending in the state. The RBS agreement followed several similar settlements with the likes of Morgan Stanley and Goldman Sachs & Co. and also followed settlements with H&R Block Mortgage Co., CitiFinancial Inc. and American Home Mortgage Servicing Inc.
The settlements with mortgage lenders and investments bankers are on top of a litany of decisions by courts and officials in the state that have hindered servicers in their attempts to resolve a rash of delinquent loans.
On Friday, GMAC Mortgage said it will stop originating Massachusetts business through mortgage brokers and correspondent lenders.
“GMAC Mortgage has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” the Fort Washington, Pa.-based company said.
Any commitments in place as of Dec. 5 will be honored by GMAC, according to the announcement. In addition, the Ally Financial Inc. subsidiary will continue to service existing borrowers and honor contractual obligations as a servicer.
“The company is disappointed that it can no longer participate in offering certain financing options in Massachusetts,” the statement said. “However, it has an obligation to manage risks and deploy capital in an appropriate manner and in a way that protects the investment of the U.S. taxpayer.”
