California negotiating with banks over mortgage settlement
California is back at the negotiating table to potentially take part in a multi-state deal with the nation’s largest mortgage servicers over faulty foreclosure practices.
For months, Atty. Gen. Kamala D. Harrishas not been involved in direct talks with the banks, walking out on negotiations last year. As recently as two weeks ago she called the potential $25-billion settlement inadequate for California. Winning the Golden State’s support of a settlement would strengthen it considerably, given the sheer size of the state’s mortgage market.
“For the past 13 months we have been working for a resolution that brings real relief to the hardest-hit homeowners, is transparent about who benefits, and will ensure accountability,” Harris said in a statement Sunday night. “We are closer now than we’ve been before but we’re not there yet.”
A spokesman for the state attorney general’s office declined further comment. Monday looms as the deadline for individual states to either reject or accept a deal -- though that deadline was originally last Friday and was pushed back to allow more time for negotiations.
State attorneys general have been talking with the nation’s five biggest mortgage servicers for more than a year now to secure a settlement following revelations of widespread foreclosure processing errors in 2010. The settlement would require the banks to overhaul their mortgage servicing and foreclosure practices as well as include a component for “principal write-downs,” or the reduction of mortgage debt for individual homeowners.
The Obama administration, mostly through the U.S. Department of Housing and Urban Development and the U.S. Department of Justice, has been pushing hard for a deal to be struck between the states, the banks and those federal agencies. California’s return to the negotiating table was first reported by the New York Times.
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