The Foreclosure Crisis Is Still Unsettled 

The much-touted National Mortgage Settlement has done little to help homeowners in the East Bay and throughout California. And banks are continuing to break the law.

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Stein and Brown give credit to California Attorney General Harris for establishing the state's own Monitor Office and staffing it with Katherine Porter, an accomplished professor of law at UC Irvine. "The California attorney general, we thought, was very strong in the negotiations," said Stein. "What California got was better."

But even though the state has its own monitor, the banks have refused to release detailed data on the financial relief they've provided. Moreover, the total level of relief is small relative to the size of the foreclosure crisis.

For example, there were approximately 34,000 foreclosures in Alameda County from 2006 through 2013, according to data accessed through the county Recorder's Office. Yet the big five banks covered by the settlement only provided 1,600 first-lien mortgage principal reductions as a result of the settlement. In other words, Alameda County borrowers for whom the big five banks reduced first-lien mortgage debt represent only 5 percent of the total number of borrowers who were foreclosed on.

Even more worrisome is the fact that the foreclosure pipeline is still in effect. There were 2,800 notices of default issued in Alameda County last year, three times the number of foreclosures. Many of these borrowers recently hit with notices of default will be foreclosed on in the next year or two.

"There's no reason why a state attorney general can't say, 'I have new violations of our consumer protection laws and open brand new cases, and prosecute these new cases,'" said David Dayen, a political analyst who has closely studied the terms of the National Mortgage Settlement. "There's no reason why they can't do that. The idea that we gave it a good try — it's not accurate. If they're violating the law, the AG has the duty to look into that, and shouldn't rely on a private right of action."

Harris' office did not respond to several requests for comment for this report.

Stein said Harris should be credited for helping pass a strong Homeowner Bill of Rights. "But what has happened since then is that servicers aren't doing what they should be doing, and we haven't seen action from the AG's office to go after them."

Until officials jump back into the ring, however, it will be up to private lawyers to try to help some small fraction of the borrowers who stand to lose their homes and savings in the years to come.

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