States that balked at bank liability releases in a proposed $25 billion nationwide settlement over foreclosure practices must decide by today whether its mortgage relief and reforms are worth the legal claims they’ll give up.
While some states have already announced their intention to sign the deal, others including California Attorney General Kamala Harris have yet to publicly commit in part due to terms that protect the banks from future litigation. Without Harris, the deal’s value will drop by several billion dollars, according to a person familiar with the matter.
The agreement is “beyond fixing,” said George Goehl, executive director of National People’s Action, a network of community organizations which advocates for fair lending and affordable housing.
“People are very disappointed in what this is going to be both in terms of dollars and release of claims,” Goehl said in a telephone interview. “We’re giving away the store.”
Most states don’t have the resources to go it alone and fight the banks in court, said James Tierney, director of Columbia Law School’s National State Attorneys General Program. States such as California that may reject the agreement must decide whether the time and money needed to fight for a better deal is worth it, given that the settlement provides immediate relief for homeowners, he said.
“How long does it take and how much better?” Tierney said of a state pursuing its own deal. “Is it so much better that it warrants the cost and delay?”
Today’s deadline, extended by the parties from Feb. 3, comes almost 16 months after all 50 states announced they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes.