Congressman Cardoza Commends Attorney General Harris for Securing $18 Billion Bank Settlement for California Homeowners

“I applaud Attorney General Harris for her diligent work on behalf of wronged California homeowners,” said Congressman Cardoza. “This is huge step for the state and will help hundreds of thousands of homeowners who have been devastated by the housing crisis. $18 billion in funding will go a long way toward stabilizing the housing market, and I am extremely pleased that Stanislaus County and the Central Valley were directly compensated as part of the settlement.”

The settlement announced today comes after California departed from the multistate negotiations last September when the state was estimated to receive only $4 billion in relief. California has been the state hit hardest by the housing crisis, and Attorney General Harris insisted on more relief for the most distressed homeowners, meaningful enforcement, and the ability of California and other states to pursue investigations into other misconduct by banks. California's participation in the settlement also increased the amount of relief other states will receive by approximately $6 billion.

Attorney General Harris also obtained separate, enforceable guarantees to ensure that banks will be accountable for their commitments to California. California's separate guarantee creates important incentives to ensure that banks will reduce the principal mortgage balance of underwater homeowners in California's hardest-hit counties and that the principal reductions in these communities will occur within the first year of the settlement.

According to the office of the Attorney General, the financial benefits of this historic agreement extend to homeowners whose loans are owned or serviced by one of the five largest mortgage lenders: Wells Fargo, Bank of America, J.P. Morgan Chase, Ally Financial and Citigroup. The deal includes the following provisions for California homeowners:

• More than $12 billion is guaranteed to reduce the principal on loans or offer short sales to approximately 250,000 California homeowners who are underwater on their loans and behind or almost behind in their payments.

• $849 million is estimated to be dedicated to refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans.

• $279 million will be dedicated to offering restitution to approximately 140,000 California homeowners who were foreclosed upon between 2008 and December 31, 2011.

• $1.1 billion is estimated to be distributed to homeowners for unemployed payment forbearance and transition assistance as well as to communities to repair the blight and devastation left by waves of foreclosures, targeted at 16,000 recent foreclosures.

• $3.5 billion will be dedicated to relieving 32,000 homeowners of unpaid balances remaining when their homes are foreclosed.

• $430 million in costs, fees and penalty payments.

County-specific payments are based on the number of homeowners and the depth of the foreclosure crisis. It is estimated that Stanislaus County homeowners will accrue $368 million in benefits over the three-year life of the commitment.

Additional details on the settlement, including how homeowners can apply for relief, can be found at www.oag.ca.gov.