National Mortgage Settlement Expires In 2015, Banks Battling To Keep Reforms From Becoming Permanent
The promises made by five of the nation’s largest banks under the much-ballyhooed $25 billion mortgage settlement have a surprisingly short shelf life.
Under the deal struck in February, Bank of America, Wells Fargo, Citigroup, JPMorgan Chase and Ally Financial pledged to stop the illegal practices that sparked false documentation and “robo-signing,” which helped push many homeowners into foreclosure and caused endless headaches for millions of other borrowers.
But the legal agreements among the banks, and the states and federal government hold for only three-and-a-half years; the pledge runs out in 2015. Now many of these banks are battling California Attorney General Kamala Harris over her push to make permanent some of the settlement’s most important “servicing standard” reforms by writing them into state law.
“The success of the national mortgage settlement in terms of reforms is laudable, but it only lasts for three years,” Harris said. “We need to make the fixes permanent.”
Banks do not seem to agree. The California Bankers Association, along with four of the five banks that settled the abuse investigation by federal and state governments in March — Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo — spent about $500,000 on lobbying efforts in California during the first three months of 2012, according to state disclosure records.