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The Massachusetts Attorney General, Martha Coakley, has filed a lawsuit against five large U.S. banks accusing them of deceptive foreclosure practices, a signal of ebbing confidence that a multi-state agreement can be worked out.

The Massachusetts lawsuit, filed in state court in Boston, accuses Bank of America Corp, JPMorgan Chase & Co Inc, Citigroup Inc, Wells Fargo & Co and GMAC of deceptive foreclosure practices, such as using robo-signers and false documents.

For more than a year, state and federal officials have been negotiating a deal in which banks would pay billions of dollars in fines - to go toward housing relief - in exchange for legal protection against future suits.

"Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law," Coakley said in a statement.

The attorney general in Iowa, Tom Miller, who is leading the negotiations for the states, said in a statement they hope to reach a settlement "soon." He also said Coakley had indicated she is still open to joining the settlement.

"We're optimistic that we'll settle on terms that will be in the interests of Massachusetts," Miller said.

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