Sources: California to Join National Foreclosure Settlement
California Attorney General Kamala Harris will still be able to sue banks that misled homeowners
California Attorney General Kamala Harris is poised to sign on to a $25 billion settlement with the nation's five largest mortgage servicers to compensate homeowners who wrongfully lost their homes to foreclosure, sources close to the negotiations told The Bay Citizen.
The Associated Press reported that New York Attorney General Eric Schneiderman has also agreed to sign on to the deal. The Obama administration has pushed hard for the settlement, under which Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial would pay billions of dollars to defrauded homeowners in exchange for a release from further civil liability.
Harris has consistently taken a hard line in the negotiations, with her office declaring as recently as Jan. 25 that the deal was "inadequate." When Harris walked out of the talks last fall, she argued the settlement asked California to “excuse conduct that has not been adequately investigated.”
Her tough stance continued even after the banks added billions of dollars in relief for homeowners who owe more on their mortgages than their homes are worth.
But on Sunday, Harris returned to the negotiating table.
Sources said that in recent days Harris received assurances that she would still be able to pursue litigation under a federal law that allows stiff penalties for companies that defraud government programs. She will also be able to sue banks that misled homeowners into signing on to loans they couldn't afford, sources said.
In addition, sources said the deal would allow California to sue the Mortgage Electronic Registration System, a private mortgage registry Fannie Mae helped establish in 1995, which claims to hold title to roughly half the nation’s home mortgages. Last week, New York’s attorney general sued MERS, contending that its "faulty and sloppy" documentation practices led to fraudulent foreclosure filings.
A spokesman for Harris said Wednesday evening that negotiations were ongoing.
Labor and consumer advocacy groups, which backed Harris during the negotiations, cheered the apparent agreement.
"California is going to get a whole lot more money than it would have otherwise," said Rick Jacobs, who heads the Courage Campaign, a California-based online organizing network. "She has made the deal a lot better."
But members of California's congressional delegation have said the deal represents little more than a "drop in the bucket" for troubled borrowers.
Approximately 750,000 borrowers who wrongfully lost their homes to foreclosure will receive $1,800 to $2,000 each, sources said.
Administration officials have said the settlement would also help about a million families get a $20,000 write-down on their mortgage.
Nationwide, about 10 million American borrowers collectively owe $700 billion more on their homes than their homes are worth.
"The amount of people the settlement is going to cover is going to be a tiny portion of the people harmed by the banks," said Tim iglesias, a professor of real estate law at the University of San Francisco.
Despite retaining her authority to sue, Harris is likely to face difficulty winning additional relief for homeowners in the future, Iglesias said. Once a national settlement is reached, he said, banks will have an easier time standing up to lawsuits from individual states than to pressure from across the country.
"It advantages the banks in terms of their legal resources," he said.
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Ann Garrison
I wish she weren't doing this. Before reading this report that she's so close to signing, I thought she might become the next Governor of California.
And what I'd really like to know is how this is going to affect individuals, not Attorney Generals, suing banks.
$1200 to $2000, per homeowner or homeowning family, for wrongfully losing their homes, quite likely their life savings, and community?
Music Man
I simply do not understand the motivation to sign on to this deal. The reason I do not understand is that neither Ms. Harris nor anyone from the Obama administration has publicly explained why letting corrupted banks off the hook is good for the rest of us. Oh, but I believe I know why. It's not!!
Rudolph Fernandez
This is a ruse... This is not an "I wish..." This is a case that must set legal precedence! Just one citizen from California can sue the Attorney General and this will stop everything... It is nauseating to follow this process and allow it to unfold with empty avenues for further prosecution... You can prosecute anyone... Whether you obtain a conviction is another story... DO NOT SIGN ON THE DOTTED LINE!
Michael Boyd
"Once a national settlement is reached, he said, banks will have an easier time standing up to lawsuits from individual states than to pressure from across the country."
AG Harris [is former girl friend Willie Brown]. We know how she got where she is is.
Her, Gov. Brown [nose], and the Obama administration [Obamabushca] routinely and by arrangement and/or implicit understanding files and pursues before various agencies positions purportedly supporting relief for underwater home owners which clearly are at variance with them, but which are intended to enable the AG to take actions to induce decisions which are also at variance with them while appearing to take compromise positions and appearing to reflect a false adversarial posture, and have the net effect of producing actions and decisions which fail in their duty to protect those underwater home owners; protecting the banks' profits instead.
This whole spin on holding out for more is more of a PR Snow Job [propaganda] by the Pacific Heights Mafia to. Harris, Feinstein, and Pelosi cry crocodile tears for the poor homeless foreclosed home owners; while they watch their vulture funds grow on their insider investments.
Aaron Glantz
California settled for $18 billion. Story here: http://www.baycitizen.org/housing/story/california-get-18-billion-mortgage/
Michael Boyd
Thanks Aaron, See my comments there too..
Roy Baril
This is all well and good, but what about all of the people with Fannie Mae mortgage loans? Where is the help, bail out, justice for all of us? I just had to use some of my hard earned retirement funds to bail myself out and I had to pay income tax penalties to do it. As far as I am concerned the 700 billion dollar bailout to the banks was pure bullcrap. The government could have given every tax paying person in America a check for 1 million dollars and STILL send 600 billion to the banks. At least everybody could have paid off the mortgage, bills, cars, school and pump up the economy at the same time. The Goverment is clueless as to how to help the tax paying public. Reparations to the Fannie Mae home owners needs to happen now.
Cheryl Meril
All she cares about is the advantages for California, not about the home owners. The government's only out for itself, that's clear. As parasites, they latch onto the tax payers as their host and suck off of it until it collapses.
In otherwords, if God had a microscope, he'd see government as a parasite sucking off his creation of humanity.
Ann Garrison
I take back what I said earlier. Big bank stocks tanked about 15% on this news. I think she may have done a lot better than I thought.