Big bucks flowing to California home owners under mortgage settlement

by Pete Carey, San Jose Mercury News

Nearly 72,000 Californians have had their mortgages reduced or forgiven under terms of a multi-state mortgage settlement with six major banks, according to a report Thursday from the state appointee monitoring the banks’ compliance.

"California is faring very well under this deal," said Katherine Porter, the UC Irvine law professor who is serving as the state’s monitor of the settlement with 48 state attorneys general.

About 41 percent of the relief so far has gone to Californians, she said.

"We think that’s the result of two things — a California commitment by three banks and the attorney general who made itclear how serious she was about enforcement of this deal. My office also worked really hard to educate borrowers," Porter said.

California Attorney General Kamala Harris held out for a special "California commitment" from three of the six banks — Wells Fargo, JP Morgan Chase and Bank of America — which is increasing the state’s share.

The three banks committed to $12 billion in principal reductions and the appointment of a monitor. "The banks that participated in the California commitment are exceeding what they said they would do to help," pushing the expected total of all forms of relief to struggling home owners in the state to $20 billion, Porter said.

An additional 24,377 borrowers are "in progress" on mortgage reductions, and the total is expected to reach 100,000 before the settlement ends. Out of a total of $16.9 billion so far, $7.5 billion has been in first or second mortgage reductions or forgiveness, Porter said.

Other relief includes assistance on short sales and "cash for keys" to homeowners who want to leave their homes.

Six banks agreed to a $25 billion multi-state settlement of charges stemming from a "robo-signing" scandal involving improper foreclosures. They are Citibank, JP Morgan Chase/Washington Mutual, Bank of America/Countrywide, Wells Fargo/Wachovia, and Ally Financial.