Business

Groups call for more on mortgage settlement

Wednesday, January 25, 2012

California labor groups, as well as mortgage counselors, are urging the U.S. Department of Housing and Urban Development to hold banks accountable for their role in fueling the housing crisis.

This after government officials say America's five biggest banks, including Bank of America, JPMorgan Chase, Citibank, Ally Financial and Wells Fargo agreed to overhaul their industry and eliminate the deceptive foreclosure practices that drove millions of people out of their homes.

Groups like the California Labor Federation and the Community Housing Council of Fresno say the proposed settlement doesn't go far enough to provide relief for homeowners.

They'd like it to include a few more provisions before California signs on.

As state attorneys general receive drafts of a $25 billion mortgage deal with the nation's biggest banks, groups throughout California are seeking tougher terms in the settlement.

"if you take the top 5 states, California has more foreclosures than the other 4 put together," John Shore of the Community Housing Council of Fresno said. "To settle for the same amount Rhode Island would settle for I don't think is fair because we have had far more losses in values as plain foreclosures."

Shore serves as Executive Director of Community Housing Council of Fresno, a non-profit group that provides counseling to homeowners facing foreclosure.

He says as the proposal stands right now, those who lost their homes are unlikely to benefit financially from the settlement.

That's because roughly one-million homeowners could see the size of their mortgages reduced and only half of the households who might be eligible for assistance under the deal will likely receive checks for 18-hundred dollars.

"I'm not sure what the 1800 dollars is supposed to do that's like putting a Band Aid on a cancer tumor," he said.

He, and the California Labor Federation, which represents more than 2 million California workers, would like to see the settlement provide people with real relief.

In a statement released Tuesday, Labor Federation leader Art Pulaski said the settlement must include provisions including widespread principal reduction for California homeowners, reform of lending practices and penalties for those who broke the law, and enforcement.

While Pulaski is calling for a full investigation into the practices that led to the mortgage crisis, Shore is pushing for new legislation that would allow homeowners to refinance at a lower interest rate.

The settlement would only apply to privately held mortgages issued between 2008 and 2011 and not those held by Fannie Mae or Freddy Mac.

So far California Attorney General Kamala Harris hasn't said whether she'd agree to the deal.

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