$18 Billion Earmarked For California Homeowners In Mortgage Settlement

LOS ANGELES (AP) – State Attorney General Kamala Harris announced Thursday that the nationwide settlement with banks over foreclosure abuses could be worth up to $18 billion to Californians who were among those hardest hit by the crisis.

Five major banks, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, will reduce loans for nearly 1 million households across the country. Checks for $2,000 will be sent to about 750,000 Americans who were improperly foreclosed upon.

The settlement will help hundreds of thousands of homeowners in California, according to Harris, who held a news conference to announce the details. Harris called the settlement a tremendous victory for the state where 2 million borrowers have homes that are worth less than their mortgages.

“We were very, very determined to make sure that California — the hardest hit in the country — would receive its fair share,” she said.

Harris estimates homeowners in Los Angeles County will receive $3.93 billion, Riverside County $1.59 billion, San Bernardino County $1.13 billion, Sacramento County $820 million; and San Joaquin $395 million.

Estimated payouts in other local counties: Stanislaus $368 million; Placer $172; El Dorado $82 million; Yolo $74 million; and Sutter $48 million

The money will go toward alleviating a wide range of issues, including modifying loans for those who are behind in their payments, repairing the blight in some neighborhoods left by waves of foreclosures, and paying off some unpaid debts to banks.

The largest chunk — more than $12 billion — will go toward reducing the amount owed on loans or offering short sales to an estimated 250,000 homeowners who are behind on their payments or “underwater,” meaning they owe more on their loan than their home is worth. Another $849 million will be used to help refinance loans for about 28,000 California homeowners with interest rates above 5.25 percent who are current on their mortgage payments but underwater on their loans.

Harris said she obtained separate enforceable guarantees to make sure the banks would honor their commitments by certain deadlines. Penalties for violating the agreement could include paying the state hundreds of millions of dollars. Harris also announced the appointment of a California monitor to help ensure the terms of the settlement are enforced.

Though she gave no specifics, Harris also said she planned to push for similar reductions for the 60 percent of homeowners whose loans are owned by Fannie Mae and Freddie Mac.

Harris talked about the hard-working families she’s met across the state who are embarrassed by having lost their homes, and even recalled how proud her own family was when they bought a home.

“There is a lot of work yet to be done,” Harris said.

The settlement stems from abuses that occurred after the housing bubble burst. Many companies that process foreclosures failed to verify documents and some employees signed papers they hadn’t read or used fake signatures or robo-signing to speed the process.

In September, when the estimated relief to California was $4 billion, Harris rejected the settlement, saying it was inadequate and would limit her ability to bring civil charges against mortgage lenders that wrongfully foreclosed on homeowners. California’s support for the settlement was critical because it was among the hardest hit states.

Even though Harris held out for more, some believe the settlement still falls short.

Richard Green, director of University of Southern California’s Lusk Center for Real Estate, believes officials have exaggerated just what kind of impact it will have.

“I really don’t see this as being that big a deal,” said Green. “In reality, the total number of dollars is still small compared to the value of the mortgages that are underwater. To some extent, the numbers reflect losses the lenders would have taken anyway.”

(Copyright 2012 The Associated Press.)

  • Tom

    And not one of the CROOKS GOES TO JAIL if one of us did this they lock us up and throw away the key normal rich bull sh!t they have thier own laws REVOLUTION !!!!!!!!!

    • nothingchanges

      Tom, Every potential home buyer MUST read the contract. I would have never put my name on a contract with massive graduated mortgage payments. The buyer must be responsible for their own actions, No one held a gun to their head. Yet all Californians must pay for it even the homeowners who have never been behind on payments……Is that fair ?

      • nothingchanges

        Tom tell me if I am a crook, We bought our home in 1990 for 91k in 2007 we sold it for 235k the woman who bought the home just lost it this year and its value is now 72k. It is unfortunate for her…Again no one held a gun to her head.

  • Whitey

    Wonderful… so those of us that bust our a$$es to make our payments on time, despite pay cuts and furloughed days, are kindly rewarded with having our tax dollars given to those that didn’t make payments… usually because they thought a $30k year job was enough income to support a $500k house. I seriously doubt anyone that was making payments on time got foreclosed on.

    Nice… thanks, Uncle Sam, for helping those of us that did it the right way.

    • Nancy

      I feel the same way…

    • nothingchanges

      Truth !

  • John Poma

    I thought this program was going to help???? I contacted Wells Fargo today to see if it would. As you may have guessed. Nothing, we can refinance our home (it is upside down) but it will cost us $2.822 to do so and cut $400 a month off our payment. If someone knows anything better please let me know. We make our payments on time have credit ratings over 800 ea but can not retire because how the banks conducted business a few years ago.

  • C Warren

    Why has no one blamed the buyers—-the ones who knew they could not afford the home they bought, and now as usual, we, the ones who follow the rules get to bail these idiots out. I am sooooo sick of picking up the tab for people who do not deserve it!

  • BP

    I have been making my payments for years to Wells Fargo. I had an interest only loan for years. NEVER once did my interest rate go down when the interest rates were going down, instead, it stayed the same. Then in April of last year, I get a letter from WFmy interest rate and payment wer being increaded – event though the rates were at their lowest across the country. Took me 4 months to hear from Wells Fargo. I called every week and at one point called every day! Now I am in a modification which has messed up my great credit and ratings – (It’s now so low) I can’t beleive the hoops I have to jump through!!!!!

  • Behind on mortgage Los Angeles

    Indeed a very nice post. I am also associated with real estate, foreclosure Los Angeles County, California taxes, property, and industry. I love to read new stuff on this subject, and I hope you will be adding new and fantastic post on property services . Thanks for writing such a wonderful post

  • Behind on mortgage Los Angeles

    Very nice post, I am also associated with real estate, foreclosure Los Angeles County, California taxes and properties. I enjoy reading new stuff on this subject, and I hope you will be adding new and fantastic posts on property services. Thanks for writing such a wonderful post.

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