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Kamala Harris skirts the truth on 2012 settlement for American homeowners: Report
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Kamala Harris isn’t being truthful about the mortgage crisis settlement she helped negotiate, according to a report by The Intercept.
The Democrat candidate has long touted a $25 billion settlement she helped “win” for homeowners in 2012 as proof that she’s a warrior for the middle class — but the deal she helped negotiate delivered next to nothing for victims while failing to hold the banks accountable.
Indeed, while Harris describes the deal as a success, it failed to help many foreclosure victims actually keep their homes.
Harris misrepresents mortgage settlement
Harris has long touted her role in negotiating the 2012 nationwide settlement with Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, and Ally Bank when she was California attorney general as a major success. Harris and 49 other state attorneys general worked out the deal, with the Obama administration leading the charge.
“We went after the five biggest banks in the United States. We won $20 billion together,” Harris told supporters in her campaign kick-off speech in Oakland.
Harris pulled California out of the negotiations in 2011 when the deal was for just $20 billion and the banks were asking to be released from legal liabilities, a deal she called inadequate at the time. But the final deal wasn’t much better.
Harris has overstated the relief the deal actually delivered for the millions victimized by predatory lenders. Her state of California got the biggest piece of the $25 billion pie — nearly $20 billion — but the settlement didn’t help victims keep their homes, and what homeowners received in hard cash was, in proportion to the harm they suffered, a pittance.
The settlement included $20 billion in mortgage relief that did not actually help most victims keep their homes. Half of that $20 billion came in the form of short sales, in which homes are sold at less than the outstanding mortgage. This practice is better for homeowners than foreclosure in terms of their credit standing, but nevertheless involves loss of the home.
Another $9.2 billion came in the form of principal forgiveness on first and second mortgages, with more than half going toward second mortgages. But banks hardly paid a price, as most of those second loans were delinquent. And while loan forgiveness might have provided some relief, the settlement granted fewer than 33,000 Californians — and 83,000 Americans across the country — forgiveness on their primary mortgages.
In terms of hard cash, the settlement included $1.5 billion in checks to victims averaging a dismal $1,480, and $3.5 billion to states, money which was never directed to go to homeowners. Then-California Gov. Jerry Brown (D) ended up using most of the state’s $410 million portion of that money for budgetary expenses, and it has never been restored to the relief fund for victims of foreclosure, despite a lawsuit.
Letting big banks off the hook
While misrepresenting what the deal actually delivered for victims, Harris has similarly played up the penalty for the banks. The 50-state task force of which Harris was a part has been faulted for not failing to hold the banks accountable for criminal foreclosure fraud, and Harris played a role in this oversight.
The banks that illegally foreclosed on millions of homes never faced serious penalties. A mortgage fraud “strike force” that Harris formed went after scam artists looking to benefit from the crisis with “foreclosure rescue” schemes, but did not prosecute the banks that created the crisis.
Harris’ office also declined to prosecute Steve Mnuchin’s bank OneWest despite evidence of “widespread misconduct;” Mnuchin violated state foreclosure laws. Harris said that she “followed the facts and the evidence… We pursued it just like any other case. We go and we take a case wherever the facts lead us.”
Financially, the banks paid a meager price, since they were mostly writing off delinquent loans or else “banks could modify loans they serviced on behalf of investors, who took the actual hit. This means that banks paid much of their fine with other people’s money,” according to the Intercept.
Far from punishing the banks and helping homeowners, Harris’ settlement let predatory lenders off the hook for criminal misconduct while doing little to help victims. And while that’s not her fault alone, she is responsible for misrepresenting what she actually “won” for homeowners in her state and across the country.
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