One of the big issues standing in the way of banks and state attorney generals coming to a nationwide mortgage settlement has been the fact that New York and California — two big foreclosure states — have not been at the table.Their participation means a larger settlement for everyone — Florida alone could see $500 million more alone if California participates. So this is a big deal to everyone.
Today though, it looks like this problem is about to be resolved. The New York Times is reporting that California AG Kamala Harris and New York AG Eric Schneiderman are getting sweeter on the deal. Just in time too — the deadline for the deal is today (then again, it was also technically Friday…).
Schneiderman and Harris have been holding out for a settlement that not only gets money for underwater homeowners, but also leaves banks exposed to more legal action. They’re coming back around to the deal because negotiators are tightening provisions that would allow AGs to continue investigating past foreclosure misdeeds at banks.
After the law suite Schneiderman filed for the state of New York against MERS (the mortgage registry system banks used), JP Morgan, Wells Fargo and Bank of America on Friday, this should surprise absolutely no one. He’s going after banks for the root causes of the crises, and that’s going to take some intensive looking back.
Then there’s looking forward — in this case, it’s to the actual distribution of the settlement money. Harris and Schneiderman want more oversight to ensure that the people that need the money actually get it.
And in case you lost track, here are the numbers we’re talking about (From the NYT):
….as it stands now the deal would set aside up to $17 billion specifically to pay for principal reductions and other relief for up to one million borrowers who are behind on their payments but owe more than their houses are currently worth. The deal would also provide checks for about $2,000 to roughly 750,000 who lost homes to foreclosure.Those figures are contingent upon the number who respond to the offer, which is likely to go to people who lost their homes between Jan. 1, 2008, and Dec. 31, 2011.
In addition, said Patrick Madigan, the Iowa assistant attorney general, homeowners who participate in the settlement will still have the right to sue the banks for improper behaviour in the foreclosure process.