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.
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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.
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“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.
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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.
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