Deadline At Hand For California To OK Mortgage Relief Deal
SAN FRANCISCO (CBS SF) - California homeowners in danger of foreclosure could soon be getting relief from five of the nation's biggest lenders.
It all depends on the state's final answer to a proposed landmark settlement - a multi-billion dollar, multi-state settlement.
As recently as two weeks ago, California Attorney General Kamala Harris rejected the plan, saying banks were asking to be absolved from any further action, something she described as too lenient. Now, California is back at the negotiating table and said to be close to signing off on the settlement, which requires financial institutions like Bank of America, J.P. Morgan Chase and Wells Fargo to overhaul their mortgage servicing and foreclosure practices, as well as come up with a $25 billion pot for mortgage relief.
"People who have been foreclosed upon would get something like $1,800," explained Guy Cecala, publisher of Inside Mortgage Finance. "Not a huge amount, they're not going to get their homes back but nobody expected that. Perhaps the biggest hunk of the money would go to borrowers who are in distress now or who have underwater mortgages and that would pave the way for some principal forgiveness and more loan modifications or refinances down the road."
KCBS' Holly Quan Reports:
"Because California is the largest state and because most, the largest share of the $25 billion they're talking about carving up with the states would go to California, it is very important to have California involved," Cecala continued. "If California's not involved, the amount of the settlement goes down and it certainly has less impact."
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