Settlement Seeks to Give Relief to Homeowners

Sonoma County homeowners facing foreclosure or who suffered mortgage-related abuses are set to receive an estimated $267 million following an agreement reached Thursday between California Attorney General Kamala Harris and five national banks, the Press Democrat is reporting.

The settlement will require Wells Fargo, Bank of America, JPMorgan Chase, Citigroup and Ally Financial to reduce the amount borrowers owe on their mortgages, lower their interest rates and pay restitution to homeowners who suffered mortgage-related abuses.

It will also force lenders to change how they deal with homeowners who are still trying to pay their mortgages as well as bar banks from foreclosing on borrowers while negotiating mortgage modifications.

The settlement is part of an $18 billion payout for California and is estimated to help some 250,000 homeowners, just 12 percent of more than 2 million borrowers now “under water.”

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Meanwhile, Occupy Petaluma will begin weekly foreclosure vigils, starting Sunday, February 19 at Walnut Park to raise awareness about foreclosures in the community. There are currently more than 300 Petaluma homes that are either facing foreclosure, are being sold at auction or are bank-owned, according to Foreclosure Radar.

Mayor Dave Glass says he’s fully behind the vigils, even if they are largely symbolic in nature.

"We can't modify contracts or set-up any sort of mortgage sanctuaries ourselves,” Glass said. “But steps like this create a positive tone and potentially set up a dialogue with banks and mortgage lenders.”

Occupy Petaluma's Foreclosure Prevention Zones are also supported by local real estate agent CJ Holmes.

Holmes said that the foreclosure crisis began the late 1990s, when banks stopped holding mortgage loans for income in their own portfolios and instead repackaged home loans into mortgage-backed securities, which were sold to investors.

"This securitization process required multiple, separate transfers or assignments of the loans from the original lenders," said Holmes.

Ownership of the home loans was then pooled security trusts created specifically for the buying, selling, and trading of residential and commercial loans. The Mortgage Electronic Registration System(MERS) was used by the banks as a private database and became the means for evading County Recorder requirements to identify the owner of the original home loan.

"Instead of recording these transfers as required by law into the county records, MERS members easily logged into their database to make assignments and transfers as they chose," Holmes said.

Holmes said this MERS process confused and intentionally mislead both the courts and homeowners about who exactly owned any loan at any given time. But it's also where the Sonoma County Boards of Supervisors, Attorney General Kamala Harris or Governor Jerry Brown could take action to halt all foreclosures in California.

"If the Sonoma Board of Supervisors, or Governor Brown were to demand that all foreclosures identify under a signed affidavit who in fact held the mortgage loan, the process of finding out who actually owned the loan could take forever in some cases," Holmes said.

“This is why things like Petaluma’s Foreclosure Prevention Zones are worthwhile. They put a public spotlight on the politicians and the public’s frustration with foreclosures. They motivate politicians to pressure the banks and take steps that will keep people in their homes.”