Hat tip to Susie for sending this along from the latimes.com:
California Atty. Gen. Kamala Harris is attracting increasing pressure from powerful Golden State players to reject a major settlement with U.S. banks accused of wrongful foreclosures.
Lt. Gov. Gavin Newsom has joined a group of California union leaders, activists and politicians in calling the direction of negotiations “a deeply flawed settlement proposal with the banks at the heart of the nation’s mortgage crisis.”
Harris has emerged as a key player in pursuing the nationwide settlement with major U.S. banks accused of wrongfully foreclosing on homeowners. She has been urged to take a hard line by consumer groups seeking help for homeowners devastated by the mortgage crisis.
A spokesman for Harris, Shum Preston, declined to comment Thursday on a letter by the newly formed group Californians for a Fair Settlement. But last week he said the attorney general is “listening keenly to what the California public has to say on this issue and rigorously evaluating any settlement proposals.”
Harris has been negotiating with the five largest mortgage servicers for months as part of a coalition of attorneys general and federal agencies seeking to hammer out a deal surrounding allegations that banks committed widespread foreclosure errors. Those involved in the talks see Harris’ participation in any settlement as crucial because of California’s size and because so many home repossessions are concentrated in the state.
The letter by Californians for a Fair Settlement, which The Times obtained Thursday, calls on Harris to reject a settlement that lacks significant principal reduction for troubled California homeowners, has overly broad liability release language that would hamper future investigations into bank practices and would require banks to pay about $20 billion.
The group, in its letter, called that amount “outrageous” and “a figure which might not even be enough to cover damages for the state of California, let alone the entire country.”
Other signatures included those of Rep. Maxine Waters (D-Los Angeles); Joshua Pechthalt, president of the California Federation of Teachers; Zenei Cortez, president of the California Nurses Assn.; Richard Hopson, chairman of the Alliance of Californians for Community Empowerment; and Steve Matthews, executive director of Service Employees International Union Local 721.
The pressure comes as foreclosures in California and other parts of the West have begun to surge anew. Significantly more properties entered the foreclosure process during August in the nation’s hardest-hit markets, including battered parts of inland California and other areas in the West, as Bank of America Corp. stepped up its activity in states where a court order is not needed to take back a home.
While I don’t agree with the stated reason California is apparently backing out of the 50 attorney general negotiation with the banks, I am pleased to see it happening. California really does have issues that differ from the rest of the country, and no real long term good can come out of California being part of a national deal that effectivly federalizes the foreclosure process going forward.
I don’t know who I find more repugnant, the Californians for a Fair Settlement or the banks. It’s a toss up.
BofA’s days have been numbered since their shotgun marriage with Countrywide. My crystal ball tells me that quite a bit of sh*t will hit the fan this week.
It hasn’t been a good week for BoA. Their stock has lost 60% of its value in the last year ($15.32 – $6.12), their website just had two days of sporadic outages, and they just announced a $5 monthly fee for use of their debit card which has angered a lot of their customers.
The question is have they “pulled a Netflix” with this new fee? Who wants to spend $60/yr to access your own money? All of this on top of the Countrywide acquisition…
What a joke. Why can’t we do it like the old days, you don’t make your freaking payment kick them out and auction the damn house. Principle reductions are disgusting. Further propaganda shifting blame from homeonwers to the banks. You took out a loan, pay the loan the f*** back or get out of the house. b/c of some friggen screwed up foreclosure paperwork you think you deserve to have your principle reduced?? Dumb asses that took on mortgages they can’t afford, did cash out refis and blew the money, DO NOT DESERVE TO BE REWARDED PRINCIPLE REDUCTIONS.
Scary how far our country has fallen people are actually buying this BS.
If we just blew the foreclosures out to begin with we would be on the road to re-building!
+1 numbers guy……………
Like any big problem, there are too many facets to be solved with broadbrush strokes. Yes, there were many people who ATM’d their homes and are looking for a fee ride. But I suspect there are just as many who truly got screwed by their “mortgage broker”/lender or even faulty processing by their banks. Treating these two extremes equally will not solve anything.
Principal reduction for everyone who is underwater. That’s a good thing.
Banks need to take a hair cut. A big one. The sky will not fall and they will learn a lesson.
If there’s anyone who can actually show that their mortgage or foreclosure was the result of fraud or other criminal acts on the part of the lender or its agents (loan brokers, appraisers, etc.), write them a new mortgage for 80% of current market value and make the bank eat the rest. For everyone else, get on with the foreclosures so the homes can be sold to people who will actually make their payments.
GeneK,
When 4 of my neighbors were foreclosed, my wife and I didn’t write the loans for those homeowners. But the value of our property was certainly affected by what happened.
Loans should be reduced to the current market value of your home and refinances done with current market rates. Anything less is going to be a long, slow bleed in housing markets and a huge drag on the economy.
CRIMINALS are running the banks.
jd,
Agreed that Criminals are running the banks.
But the value of our property was certainly affected by what happened.
Affected? Up or down?
I haven’t seen any banks giving away properties around here – they sell for what they are worth today. A few extra sales could cause a bump in value if you are in a top area that also has a shortage of inventory.
If the former owners trashed the place before moving, they should be prosecuted.
A proposed nationwide settlement with banks including Bank of America Corp. and JPMorgan Chase & Co. is being rejected by California Attorney General Kamala Harris, who will pursue her own mortgage investigation in the state that had the second-highest foreclosure rate in August.
The proposed agreement is “inadequate” and would allow too few California homeowners to stay in their homes, Harris said in a letter yesterday obtained by Bloomberg News.
“After much consideration, I have concluded that this is not the deal California homeowners have been waiting for,” Harris, a Democrat who took office in January, said in the letter to the U.S. Justice Department and the Iowa attorney general, who is leading talks for the states.
All 50 state attorneys general last year announced they were investigating bank foreclosure procedures following complaints that the companies were using faulty documents in seizing homes.
State attorneys general and federal agencies have been negotiating a settlement with the five largest mortgage servicers, including Charlotte, North Carolina-based Bank of America and New York-based JPMorgan. They have sought a settlement that would fund loan modifications and set requirements for how the banks conduct foreclosures and interact with borrowers. Harris’s office has been negotiating directly with the banks on behalf of the states.
One in every 226 California housing units had a foreclosure filing during August, more than twice the national average and second only to Nevada, according to a RealtyTrac Inc. report. Harris said 2.2 million Californians are underwater in their mortgages.
Numbers guy is right on for the bulk of the situations where buyers took on more debt that they could handle, betting that prices would continue to rise. Those people never had any significant equity. They and those who pulled all their equity out with refis have no right to special treatment just because the market went against them.
Emotion makes it hard to come to a conclusion on the housing problem. The politicians’ desire to “help” all those who are now underwater is just making the situation worse for everyone by delaying the inevitable. The public would be better served by getting the foreclosures and sales over with as quickly as orderly processing allows. We can’t have a normal market until the overhang from the bubble is cleared away and enough time has passed for new price discovery.
Jim Wrote: Affected? Up or down?
Price distortions historically create a timing problem. Eventually, any distortion to the upside usually results in a distortion to the downside once the stimulus is removed.
Basically, anything that forestalls the correction in pricing is only temporary, costs a bundle, and leaves the market worse off in the medium-term (post-stimulus). Once our government accepts that reality, we can begin to clear the market distortions. I wouldn’t hold my breath, this could be a long, long, slide, especially considering the demographic headwinds.
Of course, NSDCC will probably be fine, just not as well as it could have. All just my opinion.
Chuck Ponzi
You can’t be prosecuted for damaging your own house.
Jim, I think while you say “they sell for what they are worth today” is true, there’s a “foreclosure penalty” on properties. I wouldn’t buy a REO without a discount off the topic to account for the hidden issues the prior owner may have left.
The problem is that the banks don’t own the mortgages any more. They securitized them. And the trustees in the securitizations would rather have partial payment from a distressed property than a foreclosure or a permanent reduction in principal.
The bankruptcy “reform” disaster of 2004 (which made these securitizations possible) and the securitization run up are what caused a lot of this bubble. And, it’s the big problem holding back the foreclosures.
PS – Realtors that got people into loans they knew in their heart of hearts were irresponsible are also a large part of this disaster, but constantly paint themselves as victims, which is a bit tiresome.
Yeah I know it’s “all the rage” now to bash backs. Don’t give me this crap that your “mortgage broker screwed you”. Do you have a brain? Can you read your loan docs? Why did you sign them then? The first set of defaults in 2008 were some questionable subprime ARM’s, but they were flushed out a long time ago. Now it’s just people with 30 year fixed or ARM’s claiming “there mortgage broker screwed them”. How did they screw you? What a joke. In most other countries ALL THEY HAVE IS ARM’s! And contrary to popular belief it isn’t adjusting ARM’s that were ever the issue, most are tied to the LIBOR and have adjusted DOWN. The problem is more about dumb ass homeowners taking on more payment they could handle or taking all the equity out of their house and LOOKING FOR SOMEONE TO BLAME BESIDES THEMSELVES. How about just refusing to buy a house when the payment is $5,000/mo and you make $4,000? DUH!
They all LOVED their mortgage broker in 2004 and 2005 when their greed made them jump into the market and take on a payment more then they could afford b/c they saw their neighbors house go up $100k in a year. Oh but now that prices are falling, it’s all the banks fault.
The whole bandwagon thing in society is now to jump on the banks and blame them for everything. They just gave you a loan dumb ass. How about not taking the loan if you can’t pay it back? Did someone have a gun to your head telling you to take the loan? How about not refinancing the crap out of your property and blowing all the cash genius.
There is never a guarantee that the value of anything you buy will go up or even remain stable (if you were told there was when you bought, you might have a case of fraud against whoever told it to you). Unless someone can prove that fraudulent home sales or mortgages were part of a deliberate plot to undermine property values in your neighborhood, the affect of foreclosures in your neighborhood on your home’s value is just life.
If a bank that committed acts of loan fraud doesn’t own a loan anymore, the only difference it makes is that they ought to be required to pay damages to whoever they sold the loan to rather than taking a loss directly.
Thanks GeneK you are one if the few with an intelligent answer. I just can’t for the life of me connect the dots to why lenders making mistakes on foreclosure documents means homeowners think they are entitled to all these goodies like principle reductions and loan mods??? Where is the connection? It just an example of how weird and wacky this country has become with entitlement mentality (cash for keys, loan mods, principle reductions, etc, etc, etc) & blaming others! The only way you have a case IMO is if someone foreclosed on you when you were NOT missing payments. How many times has that happened? ZERO! Why for life of me people who miss 2 yrs worth of mortgage payments think they deserve anything just has me scratching my freaking head if everyone has gone insane! Some scary s*** if this is where we are headed.