Calif. AG steps out of mortgage settlement talks
SACRAMENTO, Calif. (Legal Newsline) - California Attorney General Kamala Harris has reportedly backed out of ongoing settlement talks with the nation's top mortgage servicers.
According to the Sacramento Bee, Harris sent a letter Friday to Associate U.S. Attorney General Thomas Perrelli and Iowa Attorney General Tom Miller, who is heading up the talks.
Harris called the proposed deal "inadequate" for homeowners, saying it provided to much protection for financial institutions.
"After much consideration, I have concluded that this is not the deal California homeowners have been waiting for," the attorney general wrote, according to the Bee.
"(The) relief contemplated would allow too few California homeowners to stay in their homes."
State attorneys general, the U.S. Justice Department, Treasury Department and the new Consumer Financial Protection Bureau are in the midst of negotiating a deal with mortgage servicers Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc.
The probe began last October with inquiries into so-called "robosigning" practices by several mortgage companies, and has since broadened into identifying and addressing additional alleged improper foreclosure practices.
Harris' move looks to be a result of pressure from union leaders and politicians.
Last week, Californians for a Fair Settlement sent a letter to Harris, asking that she reject the proposed $20 billion deal.
Lt. Gov. Gavin Newsom also joined the group in its call, calling the deal a "deeply flawed settlement proposal."
The group said the proposed amount, alone, is "outrageous," adding that it wouldn't cover damages for California much less the entire nation.
It also pointed to the settlement's liability release language, saying it could affect future investigations into lender practices.
The releases have become an issue.
More and more state attorneys general are coming out against them. Kentucky Attorney General Jack Conway was the most recent, last month.
Conway says he opposes any offer of government immunity to the financial institutions.
"We are a little concerned the banks may not be taking us seriously," Conway told the Louisville Courier-Journal. "We want them to know if they don't come up with an agreement we are going to take some actions."
Delaware Attorney General Beau Biden and Massachusetts Attorney General Martha Coakley both have said they would hesitate signing a deal that could protect the banks from continuing mortgage investigations.
Nevada's Catherine Cortez Masto has said she was going to be "cautious" about whether to sign a settlement with the five banks, especially if it could impact her state's own litigation.
New York Attorney General Eric Schneiderman has argued that servicing is at the center of the proposed deal with the banks.
In August, Schneiderman, who is currently doing his own comprehensive investigation into the mortgage industry, was removed from the committee negotiating a nationwide settlement with the lenders.
At the time, Miller said the New York attorney general "actively worked to undermine" its effort.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.
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