Late last year, California Attorney General Kamala Harris walked away from a nationwide mortgage-settlement deal with the country’s five largest mortgage servicers, choosing instead to pursue her own case for California homeowners.
The original deal would have provided financial assistance to the victims of robo-signing policies who lost homes between January 2008 and December 2011, but under the initial terms of the settlement, Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial Inc would have been released from any future legal actions by the state of California, a price Harris was unwilling to pay. Now, there are reports that the state is back at the negotiating table. The Obama administration has been working overtime to woo California (and New York) back to the table; having these two states in the picture increases the size of the pot for everyone else and, in the administration’s opinion, allows the country to move on from the events of 2008. As the deal currently stands, $17 billion would be set aside to provide relief for homeowners who currently owe more than their home is worth, plus, people who lost their homes would receive checks of up to $2000.
Is that enough? Would you like to see California settle, or would you prefer that the state take the banks to court?
Ted Frank, adjunct fellow, Manhattan Institute’s Center for Legal Policy; editor, PointofLaw.com
Ira Rheingold, executive director, National Association of Consumer Advocates