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| California Attorney General Kamala Harris. (photo: Ali Thanawalla/SFGate) |
12 February 12
here
were two people without whom the $26 billion mortgage settlement would
not have been done. One is the attorney general of California. The other
is the president of Wells Fargo's home mortgage division.
Four months ago, Attorney General Kamala Harris walked away from a proposed settlement that the banks, the Obama
administration and other state attorneys general thought was in the
bag, for two reasons: The money wasn't enough, and immunizing the banks
from further legal liability wasn't acceptable.
Because California, the most populous state in the
nation, was also far and away the worst hit by the mortgage meltdown,
Harris' signature, on terms closer to what she demanded, was essential
for any deal to stand up.
"It was a tough, 13-month-long strategy," said a
source in Harris' office. "In the last 10 days, it's been 24/7,
round-the-clock negotiations."
California's $18 billion share of a pot that could
reach $45 billion, depending on negotiations with other banks, is
considerably more than the $4 billion originally on the table,
especially given that a central issue of the settlement , the
robo-signing of foreclosure affidavits, doesn't apply to California
because such documents are not used in foreclosure proceedings here.
(The final amount of the settlement will be arrived at by a complicated
formula.)
And then there's the law. Under a separate "California
commitment" in the settlement, banks failing to enact agreed-upon
principal reductions face heavy fines in state court. Other "enforceable
guarantees" call on the five banks involved in the settlement - Wells
Fargo, Bank of America, JPMorgan Chase, Citigroup and Ally Financial -
to focus early in the agreement's three-year period on mortgage relief
for the state's hardest-hit areas, like Stockton.
That, said Harris in a news conference on Thursday, is to avoid a repetition of Countrywide Financial's
$8.7 billion national settlement. While half the money was supposed to
go toward principal reductions for California homeowners, many of them
never saw a dime. "Countrywide got relief based on a promise. We made
sure we won't be in the same situation," she said. READ MORE
