If Your Time Is Brief
Sen. Kamala Harris has repeatedly claimed she “took on the big banks” as California legal professional normal following the foreclosures disaster.
We discovered she performed a central function in reaching the $25 billion Nationwide Mortgage Settlement to offer aid to householders.
Harris additionally reached a separate $12 billion California settlement.
Moreover, Harris pushed for the California House owner Invoice of Rights in 2012, thought-about the nation’s strongest foreclosures safety regulation on the time.
Critics, nevertheless, contend that Harris was not aggressive sufficient in prosecuting bank executives.
Additionally, some critics say the quantity of aid was insufficient and did not preserve many Californians of their properties.
Throughout her speech accepting the nomination to be Joe Biden’s working mate, Sen. Kamala Harris didn’t spend a lot time — in any respect — detailing her document as a California prosecutor.
Harris did, nevertheless, repeat a line throughout her Democratic Nationwide Conference handle that’s change into normal in her stump speeches each within the Golden State and now on the nationwide stage:
“I took on the biggest banks,” Harris mentioned on the conference final week.
She was referring, partially, to the deal she struck with a number of the nation’s largest monetary establishments in 2012 as California legal professional normal to offer aid for householders dealing with foreclosures through the subprime mortgage disaster.
Harris has repeated this declare at high-profile factors all through her profession: Whereas working for U.S. Senate in 2016, throughout her January 2019 speech kicking off her personal presidential bid earlier than a crowd of 1000’s in Oakland after which two months in a while Jimmy Kimmel Dwell!:
“I took on the five big banks of the United States when we were fighting for the homeowners of California, and by extension the nation, around the foreclosure crisis and when they were basically stealing from homeowners around these predatory mortgage practices.”
Given the importance of this turbulent interval, we needed to know extra about Harris’ competition that she tackled these issues head on. What, precisely, was her function as legal professional normal “taking on the big banks,” how profitable was she and did she go far sufficient?
Background On California’s Foreclosures Disaster
In California and throughout the nation, the foreclosures disaster was devastating. Practically 10 million householders misplaced their properties to foreclosures gross sales between 2006 and 2014, in accordance with analysis by Market.
As house values plummeted, mortgage funds ballooned, typically as a consequence of predatory lending practices. Householders discovered themselves “under water,” owing a whole bunch of 1000’s of {dollars} greater than the value of their properties.
Then, as the broader financial system collapsed, many misplaced work and the power to remain of their properties. Some took a loss by means of quick gross sales, others merely deserted their properties, creating ghost cities in new suburban tract neighborhoods. Foreclosures aid funds have been nonetheless years away.
The ripple results of the mortgage disaster and ensuing Nice Recession are nonetheless felt. Thousands and thousands who misplaced their properties by no means returned to homeownership, denying households the prospect to construct wealth for future generations.
How Did Kamala Harris ‘Take On The Big Banks’?
Via interviews with housing coverage specialists and client advocates, and reviewing information articles and paperwork over the previous decade, we discovered Harris did play a central function in securing billions of {dollars} in aid funds and new protections for California householders dealing with foreclosures. She’s been broadly praised for these achievements.
We additionally discovered, nevertheless, that a lot of the mortgage aid cash was spent on efforts that didn’t preserve Californians of their properties. Moreover, client advocates informed us not sufficient was accomplished to make sure low-income households and communities of coloration obtained the assistance they wanted.
Lastly, critics say Harris ought to have accomplished extra to prosecute the monetary trade executives many blame for beginning the disaster.
Harris’ marketing campaign spokesperson didn’t reply to requests to debate this story.
Harris’ Function In The Nationwide Mortgage Settlement
In February 2012, Harris and 48 different state attorneys normal reached the Nationwide Mortgage Settlement. The $25 billion deal required the nation’s 5 largest mortgage servicers — Wells Fargo, JPMorgan Chase, Citi, Bank of America and Ally/GMAC — to offer mortgage help for householders dealing with foreclosures.
Throughout negotiations, client advocates equivalent to Kevin Stein frightened Harris would take an preliminary and decrease provide from the banks. Solely California and New York had but to signal on.
The teams noticed the quantity on the desk, described later by Harris as between $2 billion and $four billion for California, as insufficient.
Regardless of stress from different states and the White Home to settle, Harris famously walked away, a choice she speaks about continuously and writes about in her guide The Truths We Maintain.
When she returned to the desk months later, Harris helped safe the $25 billion nationwide settlement together with a separate $12 billion deal referred to as the California Settlement.
Assist delivered below the California deal would finally develop to $18 billion. Harris typically describes the whole as $20 billion in aid for California, which incorporates practically $2 billion from the nationwide deal. She described securing the help as “a tremendous victory for the people of California.”
The negotiations received Harris reward from the likes of Massachusetts. Sen. Elizabeth Warren, who appeared in a marketing campaign advert in 2016 during which she endorsed Harris for U.S. Senate and referred to as her “fearless.”
“As the fraud was being uncovered, many of the AGs were yelling ‘Settle, settle, settle.’ They just wanted to get their hands on the money. … [Harris] was the one who said ‘No, we have to do better,’” Warren informed the Los Angeles Occasions in 2016.
“She stood firm. She got more for the state,” added Stein, deputy director of the California Reinvestment Coalition, which works to make sure banks spend money on communities of coloration and low-income communities in an equitable method.
The California Settlement required the three largest mortgage firms — Bank of America, JPMorgan Chase, and Wells Fargo — to offer mortgage aid for California householders below extra stringent necessities than the nationwide deal.
‘The Banks Are Running The Government’
Whereas the agreements Harris reached with the banks promised extra assist for California householders, some economists and advocates for debtors mentioned they fell far in need of what was wanted each within the state and nationally given the size of the disaster.
In addition they mentioned an excessive amount of of the help got here within the type of quick gross sales and forgiveness of second mortgages, as a substitute first mortgage reductions, the sort most probably to maintain a borrower of their house.
“It just shows you that the banks are running the government,” Bruce Marks, founding father of Neighborhood Help Corp. of America, a serious housing counseling group, informed the Los Angeles Occasions in 2013. “There’s virtually no benefit to borrowers, and yet you give the banks credit for short sales and getting second liens wiped out — something they were going to have to do anyway.”
Underneath the California Settlement, roughly 84,000 California households obtained greater than $9.2 billion in first- and second-mortgage principal discount, in accordance with a September 2013 evaluation carried out for the legal professional normal’s workplace on how the aid funds have been spent. A barely bigger whole, $9.24 billion, was spent on quick gross sales, with the report noting: “The reality is that not every family can keep its home.”
That’s as a result of many had misplaced jobs and easily wanted to maneuver on from their huge debt, mentioned Carolina Reid, a school analysis advisor at UC Berkeley’s Terner Heart for Housing Innovation.
“They were not going to stay in that home. So, a short sale is better than an outright foreclosure,” added Reid, who was a part of the group that helped evaluation bank efficiency for the legal professional normal’s workplace following the California Settlement.
Others say the offers reached by Harris and different attorneys normal have been woefully inadequate. Christopher Thornberg, founding accomplice of Beacon Economics, a analysis and consulting agency in Los Angeles, informed Stateline in 2013 that California’s share of aid support was “chump change” in a state that has a $1.5 trillion financial system. The settlement, he added, merely allowed politicians “to thump their chest and rail against the big evil banks.”
Aid Didn’t Attain These Hardest Hit By The Foreclosures Disaster
Housing and client specialists say predatory lending practices and the ensuing foreclosures disaster disproportionately hit communities of coloration and low-income households first and the toughest.
Whereas they didn’t single-out Harris, who was elected legal professional normal in 2010 because the disaster was properly underway, they mentioned the help she helped safe got here too late for a lot of.
“By the time policy makers were thinking about homeowner relief and talking about the settlement, a significant share of Black and Latinx households had already lost their homes to foreclosure. That’s because they were the first impacted,” Reid mentioned.
Stein, the patron advocate, added there wasn’t a lot knowledge to trace efforts to assist these communities.
“The neighborhoods that needed it most, it wasn’t clear that they were getting relief,” he mentioned.
Governments didn’t begin listening to the disaster, Reid added, “until they saw the foreclosure crisis extend to white households.”
“So, absolutely, we could have done so much more to ensure that communities of color, lower-income households wouldn’t have been so badly impacted by the foreclosure crisis,” she mentioned.
Harris’ Function In Passing The California House owner Invoice of Rights
Together with serving to safe the monetary settlements, Harris is credited with serving to push by means of the California House owner Invoice of Rights in 2012.
Stein mentioned the protections within the invoice set a nationwide model and, on the time, served as “the strongest foreclosure prevention law in the country.”
It supplied householders in misery with a single level of contact at a bank, lowering the stress and duplication of working with a number of representatives. The invoice additionally required that householders obtain honest consideration for a loan modification and allowed them to reply if denied.
Lastly, and most significantly, Stein mentioned the invoice allowed householders to sue banks if their rights below the invoice have been violated.
“That was really one of the first, if not the first time, you had clear consequences for banks’ malfeasance and misconduct,” Stein added, noting some foreclosures have been stopped in consequence. “We think it served a really important deterrent value. Banks then kind of took notice and realized that they needed to comply with the Homeowner Bill of Rights or else they would get sued.”
Stein mentioned Harris totally backed the invoice after it had twice failed within the Legislature. It was signed into regulation by then-Gov. Jerry Brown in July 2012 and went into impact Jan. 1, 2013.
Harris “became the face of the Homeowner Bill of Rights and helped push it through,” he mentioned.
Why Didn’t Harris Go After Bank Executives?
Wanting again on the mortgage disaster, some have raised questions on why Harris didn’t go after bank executives extra aggressively. They level to a 2012 investigation by the legal professional normal’s workplace that discovered OneWest Bank took half in “widespread misconduct” when foreclosing properties, as reported by the Intercept. The bank was headed on the time by now Treasury Secretary Steven Mnuchin, who disputed the findings.
Final 12 months, Ian Sams, a marketing campaign spokesman for Harris informed CNBC the next:
“There was no question One West conducted predatory lending, and Senator Harris believes they should be punished. Unfortunately, the law was squarely on their side and they were shielded from state subpoenas because they’re a federal bank,” Sams wrote in an e-mail.
Regardless of that problem, CNBC famous Harris’ workplace nonetheless may have filed a civil enforcement motion towards the bank, however selected to not.
Wanting forward, advocates equivalent to Stein say they’re frightened one other housing disaster is coming given the large lack of jobs through the COVID-19 pandemic.
Authorities leaders, from Harris to President Donald Trump, will once more play pivotal roles in deciding what sort of aid to safe, and the way that help reaches these most in want.
PolitiFact California is fact-checking the claims Harris makes about her document within the state whereas she campaigns as Biden’s VP choose. Recommend a truth verify at politifactca@capradio.org, or contact us on Twitter or Fb.
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Supply Listing
Kamala Harris, Democratic Nationwide Conference speech, Aug. 19, 2020
Kamala Harris, look on Jimmy Kimmel Dwell!, March 20, 2019
Kamala Harris, presidential marketing campaign kick-off speech, January 27, 2019
Kamala Harris for U.S. Senate, “Fearless” marketing campaign advert, May 2016
Kevin Stein, deputy director of the California Reinvestment Coalition, video interview Aug. 20, 2020
Carolina Reid, college analysis advisor, UC Berkeley’s Terner Heart for Housing Innovation, video interview Aug. 24, 2020
Maeve Elise Brown, govt director, Housing and Financial Rights Advocates, e-mail interview, Aug. 22, 2020
California Lawyer Basic’s Workplace, California Monitor report, By the Numbers: Mortgage Aid Throughout California, Sept. 24, 2013
California Lawyer Basic’s Workplace, California House owner Invoice of Rights Signed into Legislation, July 11, 2012
Nationwide Mortgage Servicing Settlements, web site, accessed August 2020
Market, Divided Decade: How the monetary disaster modified housing, Dec. 17, 2018
Los Angeles Occasions, Mortgage aid didn’t assist many preserve their properties, critics say, Sept. 25, 2013
CNBC, Kamala Harris’ sophisticated historical past with Wall Street will come below scrutiny within the 2020 race, Jan. 26, 2019
The Intercept_, Treasury Nominee Steve Mnuchin’s Bank Accused of “Widespread Misconduct” In Leaked Memo, Jan. 3, 2017
Stateline, States Used Mortgage Settlement Cash to Stability Budgets, Oct. 8, 2013
Los Angeles Occasions, $25-billion foreclosures settlement was a victory for Kamala Harris in California, but it surely wasn’t good, Oct. 16, 2016
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