Mortgage | California May Join Multi-state Mortgage Settlement

February 8, 2012 – 1:32 am

The potential settlement would call for banks to provide financial assistance for homeowners who experienced foreclosure or are in danger of losing their homes. It also would require banks to overhaul their mortgage servicing and foreclosure practices as well as include a component for “principal write-downs,” the reduction of mortgage debt for individual homeowners.

Gaining California’s support for the deal would be a significant accomplishment for the administration, which in recent weeks has been trying to step up its aid for the beleaguered U.S. housing market. Monday is the deadline for individual states to either reject or accept a deal; that deadline was originally Friday and was pushed back to allow more time for the high-level negotiations.

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The administration has been pushing hard for a settlement among state attorneys general, the nation’s five largest mortgage servicers – Bank of America Corp. , JPMorgan Chase Co., Wells Fargo Co., Citigroup Inc. and Ally Financial Inc. – and certain federal agencies. But several attorneys general have expressed skepticism over the deal.

California Atty. Gen. Kamala D. Harris walked away from negotiations last year, saying the banks were asking for too much, including release from future potential legal action by the state.

As recently as two weeks ago, she called the potential $25-billion settlement inadequate for California.

But in a statement Sunday night, Harris said the door remained open for California to join.

“For the past 13 months we have been working for a resolution that brings real relief to the hardest-hit homeowners, is transparent about who benefits and will ensure accountability,” Harris

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