California Labor Federation Urges Fair Settlement for Homeowners Devastated by Mortgage Crisis
Proposed multi-state settlement falls short, Federation leader says in letter to HUD
(Oakland) — The California Labor Federation, representing more than 2.1 million California workers, today urged the U.S. Department of Housing and Urban Development (HUD) to hold the banks accountable for their role in fueling the housing crisis that has led to millions of foreclosures. In a letter to HUD Secretary Shaun Donovan, Labor Federation leader Art Pulaski expressed concern that the proposed multi-state settlement doesn’t go nearly far enough to providing relief for homeowners.
“Based on the terms described in numerous media reports, the deal appears to be a settlement for the banks, not a settlement for the middle class,” Pulaski said in the letter. “The people of California need real relief, not a quick settlement that lets the banks off the hook.”
California Attorney General Kamala Harris is one of several Attorneys General nationwide that has criticized the proposed settlement for not doing enough to help homeowners. The proposed settlement amount is expected to be just $25 billion, while the nation has $750 billion in negative equity. Twenty-five billion dollars would not even cover the loss of home equity to California families, let alone all homeowners across the country. The settlement is expected to help 1 million homeowners, when more than 10 million are underwater and millions more have been wrongfully foreclosed upon.
Pulaski said the settlement must include the following provisions:
Widespread principal reduction for California homeowners and fair redress for those who wrongfully lost their homes.
Reform of lending and servicing practices and penalties on those who broke the law to deter such wrongdoing in the future.
Real enforcement to ensure compliance.
Limited liability waivers for only those issues that have been fully investigated.
Further, Pulaski called on the US Department of Justice to do a full investigation into the fraudulent practices that led to the mortgage crisis.
“It is difficult to overstate the harm that has been inflicted on our economy by the financial institutions now seeking to pay a relatively small sum and receive broad immunity,” Pulaski said. “Foreclosures destroy families financially and emotionally, and blighted, abandoned properties destroy our communities. Cities, counties, and the state are unable to meet the needs of our most vulnerable, while banks sit on record reserves. Any settlement must provide meaningful relief to homeowners and to the economy.”
View the letter in its entirety here.