The five Big Banks involved in the nationwide mortgage settlement have nearly fulfilled their financial commitment to American homeowners. However, they’ve largely failed to make the reforms required by the settlement.

The latest report from the nationwide settlement monitor details the banks’ failure to:

  • contact homeowners being considered for loan modifications about missing documents within five days of receiving each application;
  • supply homeowners with accurate paperwork before completing foreclosure; and
  • contact homeowners with a decision to modify or foreclose within the required 30 days of receiving each application.

There have also been thousands of complaints from homeowners regarding the banks’ failure to:

  • provide a single point of contact; and
  • cease the practice of dual tracking, in which the homeowner is simultaneously considered for a loan modification and going through the foreclosure process.

Multiple states’ attorneys general have spoken out against these settlement abuses, in some cases announcing plans to sue Bank of America and Wells Fargo.

So, who’s got California’s back?

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Is $18 billion enough for California homeowners?

first tuesday insight

California’s Attorney General, Kamala Harris, appointed Katherine Porter to monitor the mortgage settlement in our state in March 2012.

Porter recently proposed broadening protections against dual tracking. Her proposal freezes foreclosure actions against a homeowner seeking a modification as soon as the application process begins, as opposed to as soon as the full application is complete. Porter is in conversation with banks about her proposal.

But Porter’s proposition is only a suggestion to banks. If the $24 billion nationwide settlement has produced little change for homeowners, how will a suggestion fare?

As the saying goes, garbage in, garbage out. Our top cops can police until they’re blue in the face, but the mortgage settlement was garbage from the beginning — it’s just now starting to stink.

First, the majority of California homeowners negatively affected by the Big Banks received no relief under the settlement terms. Then, the settlement allocated the cash so loosely that much of it ended up plugging holes in California’s state budget instead of going to those affected by foreclosure fraud.

So, it’s no surprise that these banks continue to fail to meet the terms of the settlement. California’s attorney general may be better off seeking further legal action against the banks than simply having their monitor kindly suggest they mend their ways.

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And the mortgage settlement cash goes to…

Re: Monitor Finds Mortgage Lenders Still Falling Short of Settlement’s Terms from The New York Times; The “Complete” Application Problem: A Solution to Help Homeowners and Banks Work Together from the California Monitor Program