In a victory for California homeowners facing foreclosure, California Attorney General Kamala Harris walked away from settlement talks in September 2011, with Bank of America, JPMorgan Chase, Wells Fargo, and Ally Financial, five of the largest mortgage servicers in the country. “After much consideration, I have concluded that this is not the deal California homeowners have been waiting for,” Harris wrote in a letter to the Associate U.S. Attorney General. “(The) relief contemplated would allow too few California homeowners to stay in their homes.
The talks began following the robo-signing scandal that plagued the mortgage industry with accusations of rubber-stamping when it came to foreclosure paperwork. Over the past 11 months, states have been trying to negotiate a $25 billion settlement that could be passed on to homeowners who have suffered wrongful foreclosures. Some homeowners in California lost their homes despite the promise of loan modifications by lenders who then continued the foreclosure process, often behind the scenes. In other cases, lenders could not prove they had the right to foreclose on a property, yet still evicted the owners.
California carried a lot of clout in these settlement talks because of the sheer numbers of foreclosures hitting homeowners here. New York, another state hit hard by the mortgage meltdown, withdrew from the talks earlier. A big sticking point in the negotiations was the extent to which banks should be released from liability for additional legal claims related to the mortgage crisis if they agreed to the settlement. "It became clear to me that California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated," said Attorney General Harris.
What does the breakdown of these talks mean to California homeowners? In the short term, there will be no quick relief from improper foreclosure. Longer term, Harris indicated California will act independently towards relief for California homeowners by moving forward with investigations into abusive mortgage practices that fueled the housing crisis. While one avenue of foreclosure relief for California homeowners may have changed, it’s not the end of the road.
If you are a homeowner facing foreclosure or other financial problems, contact us to discuss a solution.
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