In the last four years, more than five million people in our country have lost their homes to foreclosure.
That's millions of people who have lost their most valuable possession and seen their families uprooted. It's caused property values to crater and the number of abandoned properties to skyrocket. It's caused people to buy less and invest less, their retirement savings to plummet, and millions of jobs to be lost.
In short, the foreclosure crisis is at the root of the economic mess we find ourselves in. And just when you think things are starting to turn around, there are millions more families on the brink of foreclosure poised to continue the downward spiral.
It is why addressing this foreclosure crisis, and helping people stay in their homes, is the single most important task we face in returning to a healthy economy. This week, as part of those efforts, our office filed a lawsuit against the five major banks to hold them accountable for their serious misconduct in executing unlawful foreclosures against homeowners. Here's why.
Certainly there are many people and institutions that share the blame for this mortgage crisis. Government failed to set the proper safeguards, regulators failed to be an effective watchdog, and people were too eager to purchase homes when their financial situations should have dictated otherwise.
But throwing gasoline and a match on this economic powderkeg were the Wall Street firms and large banks that deceptively gave out loans they knew were destined to fail, and then further sold those risky loans for billions in profits. When the economy collapsed, it was the banks that were bailed out by taxpayers, while individual homeowners and investors were left on their own, and they are still taking on water.
We've now learned that the large banks didn't even follow the basic rules of law to execute foreclosures. They have admitted to fraudulently signing foreclosure documents, or robosigning. They made deceptive promises to give people loan modifications, and then abruptly changed course and foreclosed on them. And they've unlawfully foreclosed on many families in Massachusetts without even holding the mortgage notes themselves.
The large banks have charted this destructive path, sending devastating ripples throughout our economy, but yet have resisted real accountability at every stage. Banks may think they are too big to fail, or too big to care about the devastation of their actions, but they are not too big to follow the law.
From day one of this crisis, our office has been focused on achieving that accountability. We've brought landmark cases for banks' predatory lending practices, including Fremont and Option One. We've also filed three of the handful of securitization cases brought in the entire country, including first-of-their kind actions against Goldman Sachs, Morgan Stanley, and RBS. Overall, our office has secured more than $600 million in relief for Massachusetts consumers and helped keep more than 24,000 people in their homes.
Our experience was shaped our approach to the servicing fraud issues that are currently the subject of negotiations between the five major banks and Attorneys General across the country. When the negotiations began, I was hopeful that a strong resolution could be achieved. But the banks have failed to offer meaningful and enforceable relief to homeowners for their deceptive conduct. And they've attempted to obtain broad liability relief for seemingly every imaginable unlawful conduct that may have occurred. The banks have had more than a year to demonstrate they understand the full scope of their role in this economic mess, but they have failed to do so. That is why we have filed suit against them and said "enough is enough."
Our suit seeks accountability against the banks for cutting corners and rushing to foreclose without following the rule of law. We are confident in our case, and we are moving forward with our litigation aggressively. Whether through the courts, or through negotiation, we will accept only one result -- achieving real accountability for the banks' misconduct and real relief for Massachusetts homeowners.
The large banks haven't acknowledged the devastation they have caused homeowners and our economy, and they haven't been listening to us or others who seek accountability. Through this lawsuit, that voice for accountability is even stronger.
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