Mortgage settlements are not justice,” observes Occupy Fights Foreclosures, examining the record of California’s Attorney General on the eve of her Senate campaign announcement.
California attorney general Kamala Harris has announced plans to run for the Senate seat that will be vacated when Senator Barbara Boxer retires at the end of her term in 2016. As a California elected official, Harris has a track record of using buzzwords with bluster, so it comes as no surprise that her campaign announcement paid vague lip service to the plight of the populace:
"I will be a fighter for the next generation on the critical issues facing our country. I will be a fighter for middle class families who are feeling the pinch of stagnant wages and diminishing opportunity. I will be a fighter for our children who deserve a world-class education, and for students burdened by predatory lenders and skyrocketing tuition. And I will fight relentlessly to protect our coast, our immigrant communities and our seniors.”
A close examination of her tenure as Attorney General reveals a talented politician who capitalizes on the pressing issues of the day, without following through to actually protect the interests of the people.
Former San Francisco district attorney Harris was elected to the office of California Attorney General in 2010, amidst the national foreclosure crisis. In May 2011, she announced the launch of a Mortgage Fraud Strike Force pursue foreclosure fraud. On the two-year anniversary, in May 2013, Occupy Fights Foreclosures wrote an open letter to the Attorney General to ask, "How Many Banks Have You Brought To Trial?" Several dozen homeowners who traveled to her office in Sacramento were denied entry to the building; no member of her staff would appear to hear their concerns. On the third anniversary, in May 2014, the East Bay Express decried “The Strike Force That Never Struck,” noting that the only results have been ten prosecutions of foreclosure consultant fraud, far fewer than other states. California has developed a reputation as a safe haven for scam artists.
County-level district attorneys have a far better track record prosecuting mortgage fraud than that demonstrated by Attorney General Kamala Harris in the last four years. Los Angeles County prosecuted 103 cases in 2013; Orange County estimated about 40 open cases of foreclosure fraud in 2014. In Fresno County, the work has been largely left to private attorneys, who are drastically limited in the scope of their investigative duties. No help has been forthcoming from the Office of the Attorney General, despite the multi-million dollar budget of the Mortgage Fraud Strike Force.
Kamala Harris claims to have won concessions from major banks in the National Mortgage Settlement, but an examination of the numbers reveals that the $410 million California received of the $2.5 billion dollar national settlement was a boon to the state government’s general fund, not to struggling homeowners. Pro Publica published a 2012 report showing California used $306 million to balance the state budget, $86 million for investigations, and a paltry $18.4 million was reserved for homeowner counseling and overseeing the mortgage settlement. Although the banks have claimed $18 billion of relief to homeowners, over half of the total has come in the form of short sales, which still result in the devastating loss of a home. A significant portion of the actual cash relief came in the form of $1,400 payments to 200,000 Californians who lost their homes to foreclosure. To date, over 1 million homes have been foreclosed in California since the start of the Great Recession.
By negotiating settlements, instead of prosecuting banks, Kamala Harris rewarded the bankers who gambled with the world economy. The Center for Economic and Policy Research estimates the cost of the entire housing bubble to be over $8 trillion, with $1 trillion of that affecting California individuals and municipal governments. In 2012 alone, Americans lost $192.6 billion in wealth due to the foreclosure crisis. Kamala Harris is proud of helping negotiate a settlement of a few billion dollars—just a tiny fraction of the total cost to the economy. Banks broke the law but continue to rake in tens of billions of dollars in profits each year. We, the People, know that settlements are not justice. Settlements benefit the government with a cash infusion and banks with immunity for past crimes. Banks continue to skirt the edge of the law, confident they will be able to pay their way out of future crimes.
The California Homeowner Bill of Rights, which went into effect at the beginning of 2013, purports to protect homeowners struggling to keep their homes, by prohibiting mortgage lenders from negotiating loan modifications while pursuing foreclosure proceedings, providing borrowers with a single point of contact for negotiation, prohibiting robo-signing of foreclosure documents, and allowing homeowners to sue for violations of the law. The law also has a provision for special grand jury proceedings to prosecute financial crimes that span multiple counties. Despite these increased investigative and prosecutorial powers, the number of banks brought to trial remains at zero.
Without enforcement by California’s chief law enforcement officer, the Homeowner Bill of Rights has languished. Judges continue to dismiss and ignore allegations of robo-signing in court proceedings. Mortgage servicers courting aggressive growth find it easier to ignore the law than to spend resources implementing the provisions of the statute. Ocwen, the nation’s fourth-largest mortgage servicer, regularly violates the provisions of the Homeowner Bill of Rights, and employees profess having no knowledge of the law. Finally, on January 13, 2015, the California Department of Business Oversight announced the launch of license suspension proceedings against Ocwen for failure to demonstrate compliance with the Homeowner Bill of Rights. This public declaration happened to coincide with the day of Kamala Harris’s Senate campaign announcement.
Kamala Harris used homeowners to secure her political future, but in the end, she has refused to pursue justice by prosecuting any bankers. Despite early promises, little has been done to deter the crimes and risky financial practices that created the housing bubble. Harris has failed to enforce the California Homeowners Bill of Rights, creating a scammer’s paradise in the Golden State. The state’s share of the mortgage settlement funds were used to balance the budget, not help individual homeowners. Kamala Harris has a demonstrated record of helping big government and big banks, refusing to meet with her constituents, and failing to deliver on her promises. Is this the politician we want to represent the interests of California citizens in the Senate?
“Billion Dollar Bait & Switch: States Divert Foreclosure Deal Funds.” ProPublica, May 22, 2012.
“Attorney General Kamala D. Harris Announces Passage of Bills in California Homeowner Bill of Rights Package.” Office of the Attorney General, May 30, 2012.
“Where Are the Foreclosure Deal Millions Going in Your State?” ProPublica, Oct. 23, 2012.
“Homeowners and Occupy Fights Foreclosures Ask Attorney General Harris, ‘How Many Banks Have You Brought To Trial?’” Occupy Fights Foreclosures, May 23, 2013.
“Default Mode: How Ocwen Skirts California’s Mortgage Laws.” Capital & Main, May 5, 2014.
“The Strike Force That Never Struck.” East Bay Express, May 29, 2014.
“The Foreclosure Crisis Is Still Unsettled.” East Bay Express, Apr. 23, 2014.
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