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Deadline At Hand For California To OK Mortgage Relief Deal

SAN FRANCISCO (CBS SF) – California homeowners in danger of foreclosure could soon be getting relief from five of the nation’s biggest lenders.

It all depends on the state’s final answer to a proposed landmark settlement – a multi-billion dollar, multi-state settlement.

As recently as two weeks ago, California Attorney General Kamala Harris rejected the plan, saying banks were asking to be absolved from any further action, something she described as too lenient. Now, California is back at the negotiating table and said to be close to signing off on the settlement, which requires financial institutions like Bank of America, J.P. Morgan Chase and Wells Fargo to overhaul their mortgage servicing and foreclosure practices, as well as come up with a $25 billion pot for mortgage relief.

“People who have been foreclosed upon would get something like $1,800,” explained Guy Cecala, publisher of Inside Mortgage Finance. “Not a huge amount, they’re not going to get their homes back but nobody expected that. Perhaps the biggest hunk of the money would go to borrowers who are in distress now or who have underwater mortgages and that would pave the way for some principal forgiveness and more loan modifications or refinances down the road.”

KCBS’ Holly Quan Reports:

“Because California is the largest state and because most, the largest share of the $25 billion they’re talking about carving up with the states would go to California, it is very important to have California involved,” Cecala continued. “If California’s not involved, the amount of the settlement goes down and it certainly has less impact.”

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

More from Holly Quan
  • rich arnold

    This comment is about the Attorneys’ General mortgage case. I am sick and tired of home owners and foreclosed former homeowners begging for a ‘gift” of principal forgiveness/huge sums of money. Yes, the banks did make mistakes in processing foreclosures, but I doubt if any home was foreclosed on where the payments were current.,there were no delinquencies. Most of the foreclosures would have taken place anyway following proper procedures. The news story interviewed a homeowner who thinks he is entitled to principal forgiveness because he in “underwater.” I purchased my home in 2005. It’s value is over $100,000 less than what I paid for it, however I make my payments and will keep making my payments. My home is still worth more than my mortgage ONLY because I put down a large down payment. Home owners may be entitled to modifications to help them keep their homes in an affordable manner but they are no more entitled to PRINCIPLE forgiveness than i am. No one forced these buyer to purchase a house. Yes, some buyers were mislead into taking out mortgages they probably could not afford – modification is their recourse not principle forgiveness.

    • proud_bay_man

      “No one forced these buyer to purchase a house. Yes, some buyers were mislead into taking out mortgages they probably could not afford”

      You speak from both sides of your mouth. Do you work in real estate?

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