SACRAMENTO, Calif. (Legal Newsline) - California Attorney General Kamala Harris announced Friday she has appointed a law professor to be the state's independent monitor of banks as part of a settlement with the nation's five largest banks.
Katherine Porter, who specializes in commercial and consumer law, including bankruptcy, mortgage foreclosure and credit cards at University of California Irvine's School of Law, will assist Harris' office in holding the banks accountable for their commitment to the state.
In February, federal officials and 49 state attorneys general reached a $25 billion agreement with Wells Fargo and Co., JPMorgan Chase and Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp. over their alleged improper foreclosure practices.
Of the $25 billion, California claimed the largest portion of the pot -- $18 billion.
"We must enforce full and timely compliance with these commitments, and the appointment of Professor Porter as our California monitor is central to that enforcement," Harris said in a statement Friday.
"Professor Porter's wealth of experience and knowledge will protect the interests of homeowners and ensure the settling banks deliver on their promises."
Porter, who recently released a book, "Broke: How Debt Bankrupts the Middle Class," promised to "work hard" to make sure the banks hold up their end of the deal.
"Part of repairing the damage of the mortgage crisis is restoring public confidence that our largest financial institutions will treat consumers fairly and follow the law," she said in a statement.
Porter is a principal investigator in the 2007 Consumer Bankruptcy Project, a fellow of the Bankruptcy Data Project at Harvard, and a member of the World Bank Insolvency and Creditor/Debtor Regimes Task Force Working Group on Natural Persons' Insolvency.
She also has worked with various government entities, including the Federal Trade Commission and the Consumer Financial Protection Bureau, on issues relating to mortgage servicing.
After the nationwide settlement is approved by a federal district court in Washington D.C., Porter will verify the extent and timeliness of lenders meeting their obligations to California homeowners, the Attorney General's Office said.
Using information obtained by the national monitor of the mortgage settlement, former North Carolina Commissioner of Banks Joseph Smith, Porter will review lender filings, homeowner reports and complaints, and other compliance documents to ensure that benefits committed by the banks are performed and result in "meaningful relief" to California borrowers, Harris' office explained.
In addition, she will regularly report the results of her findings to the Attorney General's Office.
Harris said Bank of America, Wells Fargo and JPMorgan Chase will face "significant" financial penalties if they do not meet their guarantee of a maximum of $12 billion in principal reductions and short sales for homeowners in the state.
The attorney general has called the nationwide settlement an "historic commitment" for California, which was the hardest hit by the mortgage crisis.
"California families will finally see substantial relief after experiencing so much pain from the mortgage crisis," she said in a statement last month. "Hundreds of thousands of homeowners will directly benefit from this California commitment."
Talks between the attorneys general, federal officials and the five banks dragged on for months before a deal was finally struck.
However, the settlement only covers those mortgages held by the five banks, not Fannie Mae or Freddie Mac.
California had departed from the negotiations in September, when the estimated relief for the state was estimated at $4 billion.
Harris, at the time, called the proposed deal "inadequate," and insisted on more relief for distressed homeowners, meaningful enforcement and the ability of state attorneys general to pursue investigations into misconduct.
"This outcome is the result of an insistence that California receive a fair deal commensurate with the harm done here," the attorney general said last month of the nationwide deal.
"We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending."
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.