Fearing that banks might get off too easy in the multi-state mortgage settlement talks, Massachusetts Attorney General Martha Coakley is preparing to file lawsuits against the nation's largest servicers for wrongfully foreclosing on customers.

In a statement Wednesday, Coakley said that she has "lost confidence" that the banks — Ally Financial Inc., Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., and Wells Fargo & Co. — "will bring to the table an agreement that properly holds them accountable for wrongful foreclosures. Because our office for some time has anticipated that result, we have begun preparing for litigation."

The Boston Globe reported Thursday that Coakley is not formally withdrawing from the multi-state discussions. Other state attorneys general have previously signaled their displeasure in the negotiations with the nation’s top mortgage servicers. The issue of future lawsuits and whether banks will be released from liability for past servicer-related misconduct has proven a sticking point in the discussions.

Last week California Attorney General Kamala D. Harris withdrew from the negotiations and said in a letter to Iowa Attorney General Tom Miller, who is leading the talks, that the deal being discussed was "inadequate for California homeowners." In August, New York Attorney General Eric Schneiderman was accused of trying to undermine the negotiations and removed from the coalition’s executive committee.

Industry observers said that without California and New York onboard, a multi-state settlement would be hard to finalize. If a settlement is reached, the terms will be provided to all 50 states and each attorney general can decide whether to join.

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