California opts out of 50-state mortgage settlement talks

California attorney general says banks are not offering enough relief for state homeowners

By Jonathan Sweet, Editor in Chief | October 3, 2011

California is dropping out of settlement talks with the nation's biggest banks over their mortgage practices.

The attorneys general of all 50 states have been negotiating with the country's five largest mortgage servicers (Bank of America, JPMorgan Chase, Citigroup, Ally Financial and Wells Fargo) since this spring over charges that the banks improperly foreclosed on troubled homeowners. California Atty. Gen. Kamala Harris says the banks were not offering enough compensation to California homeowners, and we're asking for too much, such as broad immunity from other charges, in return.

“It has been a process of negotiating and sitting at a table in good faith, but ultimately I have decided that we have to go our own course and take an independent path. And that decision is because we need to bring relief to Californians that is equal to the pain California experienced, and what is being negotiated now is insufficient," Harris told the Los Angeles Times.

As the nation's largest state, and one of those with the highest number of foreclosures, California's departure from the talks deals a serious blow to the efforts. New York Atty. Gen. Eric Schneiderman has also threatened to drop out of the talks over his concerns that the banks are not offering enough in settlement. Despite that, the remaining states plan to continue their efforts,  Iowa Atty. Gen. Tom Miller, who has been leading the talks for the states, said in a statement:

“The multistate effort is pressing forward, and we fully expect to reach a settlement with the banks. Providing relief after the foreclosure crisis is over would be a hollow victory indeed.”