California Members of Congress Call for “Justice for Homeowners” in Settlement with Mortgage Servicers

California Members of Congress call for “justice for homeowners”
in settlement with mortgage servicers
Lawmakers object to “get-out-of-jail free card” for large Wall Street banks
WASHINGTON, DC – Citing reports that a settlement with Wall Street’s largest banks could mean only $25 billion in relief to homeowners, U.S. Rep. George Miller (D-Martinez) and more than two dozen of his Democratic colleagues from the California congressional delegation today urged Attorney General Kamala Harris not to give the Wall Street banks a “get-out-of-jail free card” while leaving homeowners out to dry.
The lawmakers wrote in support of Harris’ efforts to ensure that a settlement being negotiated between states and large banks over mortgage abuses provides substantial relief to California homeowners. Reports suggest that the settlement under discussion would provide just $20 billion to $25 billion in relief to homeowners, despite the fact that underwater homeowners nationwide owe $700 billion more on their mortgages than their homes are worth.
From the letter, “It is clear that thousands of Californians have been hurt by unfair and, in many cases, illegal practices in the foreclosure process. For this reason, we feel that it is critical that any settlement regarding these abuses must be fair to California homeowners. In particular, we believe that a deal must be structured to provide substantial financial relief for these homeowners…
“Additionally, we do not feel that it is responsible to grant a broad release of liability for abuses that have not been investigated by the attorneys general and are not remedied in the settlement. Our constituents need to know that our nation’s largest financial institutions have the same mandate to follow the law that they do—in other words, the simple fact of being an enormous Wall Street bank cannot mean getting a get-out-of-jail free card.”
Miller said his constituents are fed up. “Wall Street banks have chewed up homeowners all over the country, with no regard for the law or for what’s right. This is not an every once in a while story – it is an everyday story. Every day we hear how banks lose paperwork or charge ridiculous fees or give homeowners wrong information about a modification. This is abuse. Pure and simple. And it has been at every stage of the mortgage process. We need to provide justice to these homeowners.”
The lawmakers also asked that Harris conduct “a vigorous and wide-ranging investigation into the mortgage industry’s conduct during the foreclosure crisis” and that she robustly enforce California law against predatory and unscrupulous lenders. Last year, members of Congress from California wrote to U.S. Attorney General Eric Holder asking that he investigate foreclosure abuses against California homeowners.
The letter represents the latest of a number of actions taken by California Democrats in Congress to address the foreclosure crisis. Most recently, members wrote to President Obama asking him to take more aggressive action and conducted a series of meetings with Federal Housing Finance Agency Acting Director Ed DeMarco regarding the need to provide more assistance to underwater homeowners.
Approximately 30% of all California homeowners with mortgages are currently underwater on their homes, while many more families are struggling to pay their mortgages due to continued high unemployment in the state.
The full text of the letter with signatories is below
—
Dear Attorney General Harris:
We are writing to commend your leadership in ensuring that California homeowners get meaningful relief from any settlement with our nation’s largest financial institutions regarding mortgage and foreclosure fraud, and for your work to ensure that a legal settlement does not relieve those institutions of liability for abuses that have not been fully investigated and addressed.
As you know very well, California has been hit extremely hard by the housing crisis. One of every 226 housing units in our state received a foreclosure filing in August—a rate over twice the national average. According to CoreLogic, 30 percent of homeowners with mortgages in our state are underwater—again, one of the highest rates in the country. These problems do not just impact homeowners directly—they are devastating for realtors and construction workers who are losing work, for local governments losing property tax receipts, and for all sorts of small businesses who lose customers.
At the same time, California has also been home to myriad abuses throughout the mortgage process. Last year, in response to numerous concerns that we all heard from our constituents, we catalogued dozens of cases of abuses in the mortgage modification and foreclosure process. We wrote Attorney General Holder last October urging him to investigate these cases and similar abuses. It is clear that thousands of Californians have been hurt by unfair and, in many cases, illegal practices in the foreclosure process.
For this reason, we feel that it is critical that any settlement regarding these abuses must be fair to California homeowners. In particular, we believe that a deal must be structured to provide substantial financial relief for these homeowners. Far too few California homeowners—particularly homeowners who are underwater on their mortgages—have, to date, received the assistance that is necessary, and that must change with this deal. Additionally, we do not feel that it is responsible to grant a broad release of liability for abuses that have not been investigated by the attorneys general and are not remedied in the settlement. Our constituents need to know that our nation’s largest financial institutions have the same mandate to follow the law that they do—in other words, the simple fact of being an enormous Wall Street bank cannot mean getting a get-out-of-jail free card. We also look forward to a vigorous and wide-ranging investigation into the mortgage industry’s conduct during the foreclosure crisis, and to robust enforcement of California law against predatory and unscrupulous lenders. It is very important that we provide not only justice for the homeowners who were the victims of these abuses, but also accountability for those who committed them.
Therefore, we thank you for your work to ensure that any settlement is a strong one that is fair to California homeowners and urge you to hold strong to these principles. Thank you for your hard work and for keeping these views in mind.
Sincerely,
Baca
Berman
Capps
Cardoza
Chu
Costa
Davis
Eshoo
Farr
Filner
Garamendi
Hahn
Honda
Lee
Lofgren
Matsui
McNerney
Miller, George
Napolitano
Roybal-Allard
Sanchez, Linda
Sanchez, Loretta
Schiff
Speier
Stark
Thompson
Waters
Waxman
Woolsey