The Largest Economy in the US Stops Negotiating Over Foreclosures
Discussions between the states and major US banks regarding foreclosure practices may continue without the involvement of California, according to the Wall Street Journal. In the past, California had been considered a key player in the negotiations, but after Attorney General Kamala Harris walked out on discussions in September the banks are proposing a deal that excludes the Golden state.
The current proposal by Ally Financial, Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), Citigroup (NYSE:C), and JP Morgan Chase (NYSE:JPM) offers the other 49 states a package valued at $18.5 billion, though negotiators are still trying to persuade California to join the deal, which would up the deal to $25 billion. Reuters reports that banks will most likely pay their penalties in the form of principle reductions and other aid to assist homeowners in trouble.
California’s Harris reportedly walked out of negotiations in September because she felt that the deal on the table at that point was not sufficient, providing too little relief for California residents and letting the banks off the hook too easily. California was one of the states that was hit the hardest by foreclosures and declining real estate prices.
Reuters quoted Dan Frahm, a senior vice president at Bank of America (NYSE:BAC) who said, “While we would prefer to have all 50 states benefit from such an agreement, we are open to discussing alternatives that would allow us to begin delivering additional solutions to our customers in those states that remain active in the settlement discussions.” There was no comment given by the other banks involved or by the California AG.