California To See Bulk Of Landmark Foreclosure Settlement

SACRAMENTO (CBS SF) – The five largest mortgage lenders have reached a $26 billion settlement with 49 states, including California, over foreclosure abuses that took place after the housing bubble burst, federal officials announced Thursday.

Related Resources:
California Attorney General’s Settlement Information
Frequently Asked Questions On Who Qualifies
San Francisco Consumer Credit Counseling Service
HUD Approved Hosing Counseling Agencies

The lenders will have three years to fulfill the terms of the landmark deal that California Attorney General Kamala Harris said could make as much as $18 billion of relief available to thousands of homeowners in the state.

KCBS’ Holly Quan Reports:

Harris and New York Attorney General Eric Schneiderman had been reluctant to sign onto the settlement that did not offer significant help for homeowners.

California walked away from settlement negotiations in September when homeowner relief for California was expected to be $4 billion. Harris said in a written statement the new settlement guarantees as much as $12 billion in principal reductions for California homeowners who are underwater on their loans or behind on payments.

Harris said the additional money allocated for California would help some 28,000 homeowners in the state eligible for refinancing, and another 140,000 eligible for cash restitution because the banks seized their homes.

KCBS Cover Story: Underwater Homeowners Credit Community Activism for Mortgage Relief

“This is not the complete conclusion to the foreclosure crisis. It’s not going to reach everybody, but it’s a meaningful start,” said Bruce Mirken with the San Francisco-based Greenlining Institute.

Mirken applauded Harris’ push for the larger settlement, which could ultimately be worth $40 billion nationwide.

“It’s certainly more than folks feared that this deal was going to have,” he said.

KCBS’ Doug Sovern Reports: Challenges Inherent With Navigating Mortgage Settlement

The settlement also allows Harris to sue banks who are slow in complying with its terms.

The deal ends a separate investigation into Bank of America and Countrywide for inflating appraisals of loans from 2003 through most of 2009. Bank of America will pay $1 billion to settle that federal probe.

Oklahoma is the lone holdout and will receive no money.

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 This material may not be published, broadcast, rewritten, or redistributed.)

  • Fitzwilliam

    This is such a crock. I just spent about two hours on the phone with the Homeownership Preservation Foundation on their “HOPE Hotline”. I lost my job at the end of 2010 and have been on unemployment ever since. I asked the rep if there was ANYTHING available for me in terms of loan modification and the answer remains: “No”. Unless you have an income (and I don’t mean unemployment), you aren’t going to get a loan modification. The rep told me that the best thing I could do would be to short sale my place (not sure where I’m supposed to live – I guess a homeless shelter). Here is what kills me: I bought the place in 2004. I did everything “right” — I didn’t over-buy (it’s a one-bedroom 740 sq. ft. condo), I held out for a fixed rate instead of falling for one of those interest-only loans every broker was waving in my face, and while I had a job, I was able to swing it. Then the millionaires that own the firm I worked for decided to outsource my work (so much for the rich creating the jobs). I’ve been supplementing my unemployment with my savings in order to keep current on my mortgage. I’m under water to the tune of about $100K and my mortgage payment is $1400/month. If I do a short sale on my condo, the person that ends up buying it will get payments equal to about half of what I’m paying now. All I’m trying to do is hang on to my home a little longer in the hope that I’ll find a job since all you hear on the news is how the unemployment situation is getting so much better, but they aren’t going to help you unless you have a job with an income – and I don’t mean a contract or temporary job either. They want you to have a “permanent” position. Take a look at how many jobs out there are permanent versus contract (so the employer doesn’t have to pay benefits) these days. So from my perspective, this bit settlement doesn’t mean diddly if you’re unemployed. Sure sounded good when I heard about it on the news though.

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