A proposed multistate settlement with Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and three other U.S. mortgage servicers to resolve probes of foreclosure practices is “inadequate for California,” state Attorney General Kamala Harris’s office said.
The attorney general reviewed the latest settlement proposal from the banks, which include Citigroup Inc. (C), Wells Fargo & Co. and Ally Financial Inc. (ALLY1), said Shum Preston, a Harris spokesman, in an e-mailed statement today.
“Our state been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability,” Preston said in the statement. “At this point, this deal does not suffice for California.”
The proposed accord would set requirements for how lenders conduct home foreclosures and would also require the banks to fund loan principal writedowns for homeowners and provide refinancings, said a person familiar with the matter who didn’t want to be identified because the terms aren’t public.
Without California’s participation, the nationwide deal with the five banks will be worth about $19 billion, instead of $25 billion if the most populous state joins, the person said.
Harris, a Democrat who took office in January 2011, had previously raised concerns about the scope of the liability releases in any deal. She said any agreement shouldn’t include releases for conduct that hadn’t been fully investigated.
Attorneys general from all 50 states announced an investigation into foreclosure practices more than a year ago following disclosures that banks were using faulty documents to seizing homes. The proposed agreement was reached with a group of state attorneys general and federal agencies, including the Justice Department.
Delaware Attorney General Beau Biden, a Democrat, announced Jan. 23 that he wouldn’t join the multistate agreement as drafted.