Kamala Harris, the attorney general of California has withdrawn from the foreclosure settlement talks with the mega banks; it is a big blow to the efforts of the Obama government to reach a settlement worth $25 billion. Before her the A.G. of New York had already withdrawn. Other states – Minnesota, Nevada, Massachusetts and Delaware have already expressed their displeasure with the turn the talks were taking.
The bone of contention has been the granting of wider release to the banks from further legal claims in matters beyond foreclosure abuses. The argument has been that enough investigation has not been done till now.
Ms. Harris in a note to Thomas Perrelli the Associate U.S. Attorney General and Tom Miller the Attorney General of Iowa said, “It became clear to me that California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated”. She added that the relief that was being planned would not be of help to many house owners in California. She said following the robo-scandal exposure there has been a surge in foreclosures in the state.
Miller in response said that California was “an important part of our team”. However he was hopeful that a settlement would be reached with the financial entities.
A spokesperson of the Justice Department said that the talks would continue “to ensure that the banks are held fully accountable for their actions”.
The difference highlights a broader point of disagreement between some of the officials participating in the talks. The Obama government has pleaded that the settlement would help the borrowers immediately while improving the conditions of the housing market. Millers said, “We are 100% focused on providing relief to homeowners while it can still make a difference and save homes from foreclosure. Providing relief after the foreclosure crisis is over would be a hollow victory indeed”.
The recent turn of events was not totally unexpected. The talks have been dragging on amidst mounting political pressures. Both the parties were unhappy with suggested deals. The conservatives thought it was too harsh on the banks while the labour unions and the political groups with liberal leanings had warned that the settlement was being a give away to the banks.
Harris and other state attorneys general from the Democratic Party have been under pressure to hold on for a bigger deal. But a spokesperson of Harris said that the decision had been taken founded on “the evidence and the merits of the deal, not other considerations”.
Julie Thompson, has been working on ForeclosureDataOnline.com studying the foreclosures market, helping buyers on the finer points of Fort Lauderdale foreclosed homes for sale.