California AG Harris Turned Down a Guaranteed 60% of the Foreclosure Fraud Deal
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By David Dayen
Somebody really wants this foreclosure fraud settlement to go through. So much so that California was offered a sum to participate in the settlement sure to piss off the other 49 AGs across the country. Only California was guaranteed earmarked funds from the settlement. Earlier we heard they would get $8 billion out of the $25 billion pot, or 32% of the total (California has roughly 10% of the population). Now, Shahien Nasiripour says they were in line for $15 billion, or a whopping 60%.
California, home to the largest US property market, spurned an offer of roughly $15bn in lower monthly mortgage payments and reduced loan balances for its residents in talks to settle allegations of mortgage-related misdeeds by leading US banks.
Bank of America had guaranteed California borrowers would receive $8bn in mortgage aid, while Wells Fargo and JPMorgan Chase committed at least $5bn to the state’s distressed homeowners, according to people familiar with the matter, who declined to give exact figures.
California would have received more than half of about $25bn of aid that would be available to borrowers in a nationwide deal under discussion to settle allegations that banks illegally seized homes using faulty documentation.
Deal terms, sent to state attorneys-general late last week after nearly a year of talks between the banks and various states and federal agencies, did not include guaranteed minimums for any other states, people familiar with the matter said. Various state officials said they were unaware of the California offer.
I suppose this could be disinformation designed to anger the other AGs and pressure California’s Kamala Harris to accept the deal when the terms are actually not as clear-cut. But this shows two things: one, how desperate federal regulators are to get California into the deal, and two, how inadequate the overall deal is, even to the state of which it’s tilted so far in favor.
Looking at raw population totals isn’t a fair way to look at this; California has lots of single-family homes, more than other states, and a large oversample of subprime loans. It’s hard to get at all these figures. But I was a bit surprised that the state is not in the top five among homes in negative equity. About 30% of the state’s homes have negative equity, behind Nevada, Arizona, Florida, Michigan and Georgia. If I were the AGs of those other states, I’d be pissed that California is getting such special treatment.
But one of those state AGs, Pam Bondi of Florida, is instead mad that California won’t go along, which likely holds up the deal for other states.
Florida Attorney General Pam Bondi stood by the 50-state attorneys general settlement with the nation’s biggest banks on Thursday as California and Delaware formally rejected the proposal she helped negotiate.
Bondi said Floridians can’t wait for foreclosure relief and that the draft proposal sent to states on Monday addresses California’s concerns.
“The settlement under discussion contains all the elements California purports to be looking for; transparency, substantial relief for distressed homeowners, and strict enforcement,” Bondi said Thursday. “Florida’s homeowners need relief now, and protracted and uncertain litigation would be contrary to their best interests.”
Bondi would have to share $10 billion with the rest of the country, with no guarantee of any percentage going to her state, and she’s mad at California, and not the officials who negotiated that stinker of a deal for her?
And here’s the larger point. This settlement deal is so bad, that even the state getting 60% of it sees that it would not provide commensurate relief to the scale of the problem. When the overall deal is $25 billion and there is $700 billion in negative equity nationwide, you can see that as a problem. Plus, if I were any AG, I would doubt the enforcement, since the last time they settled with a mortgage lender on fraud claims, and were supposed to get loan modifications as a result, Bank of America didn’t do the mods, in the Countrywide settlement.
So between California and Florida, there’s one AG who has their head on straight at the moment, and one who doesn’t. Of course, you have to understand who these people are working for. In the case of Harris, it looks to be the people. In the case of Bondi… the banks. Why else would she fire the two most aggressive investigators in her office looking into foreclosure fraud?
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Dave Dayen is a writer, comedian and TV/film editor based in Santa Monica. This piece originally appeared on Firedoglake.
I completely support AG Harris opinion in this matter. By denying the current settlement dollar amounts proposals and arrangements saying NO was the right answers and that decision is in allignment with the people whose home equity has suffered and the people that have fallen victim to the predatory lending tactics. The current offer does not come near half the amount to the $700 billion dollars at issue.
The proposal doesn't even come near to justify to begin discussion. This is a serious problem should not be taken lightly or any hasty actions. AG Bondi should realize that her personal interest should not come first. Her constituents are just as angry as any of the population in the other 40 States affected by predatory lending practices that led this nation and the world to a near collapse of the Banking institution. The offer should reflect a fair settlement for the losses in order to be considered a settlement in Good-Faith. $25 Billion is far from a good-faith offer. $25 Billion in addition to the $700 billion may be the better settlement offer. That is right, I call for $725 billion dollars in restitution plus any legal cost and any additional legal cost for the burden to defend this case under grand jury for all the people that has suffered and financially impacted by the greatest CON in the history of this nation and the World.
AG Bondi obviously has not considered all of these and the wide spread impact it had that goes far beyond the bordering state of Florida (and for that matter beyond the borders of United States. The lessons to be learned for the greatest misconduct of corporate greed and the greed in the banking system has not sink in to these opposition. They would rather take the settlement as-is giving them the opportunity of a fast and short-term gains to enrich the proponent of this settlement without considering the long-term effect as the foreclosures continue to rise and affect the economy. Should the peoples' home economic continue to suffer at their expense when the bailout has not trickle down to those who were innocent in this matter and then tricked again to accept a settlement that eventually short-change them?
Responsible people should only commit to a responsible settlement that is commensurate to remedy for the financial burdens arising from the misconducts. Only then should there be any further discussion in dealing with how to disburse settlement in a fair and timely matter. AG Harris was correct. AG Bondi and the other AG and those responsible in the settlement conference and those who wish to settle for the $25 Billion should stop and think for the people before their own interest that is at stake. Generally, the best settlement for the people will result in the best compensation to those involved in executing the best settlement. Logic indicates the best outcome brings the best reward. So sit tight for the people.