New York Attorney General Eric Schneiderman and California Attorney General Kamala Harris agreed to join the settlement yesterday.
"With California and New York signing on, it's a huge deal," said Kurt Eggert, a professor at Chapman University School of Law in California who has been following the talks. "California and New York were the biggest critics of this deal, so if they sign on, that's a sign that this is a real deal."
In a statement, Harris said her state, one of the hardest hit by foreclosures, would get $18 billion under the deal.
The settlement doesn't release any criminal liability or grant any criminal immunity, release any private claims by individuals or any class-action claims, or release claims related to the packaging of mortgage loans into securities, according to the website outlining the agreement.
The resolution also establishes a monitor, Joseph A. Smith Jr., North Carolina's top banking regulator, to track compliance with the terms of the agreement.
The 50-state investigation, announced Oct. 13, 2010, came after New York-based JPMorgan, the largest U.S. bank by assets, and Ally Financial's GMAC mortgage unit said they would stop repossessions in 23 states where courts supervise home seizures, and Charlotte, North Carolina-based Bank of America froze foreclosures nationwide.
Ally, based in Detroit, was first to freeze evictions in September 2010, after depositions in lawsuits challenging foreclosures surfaced showing that employees signed affidavits containing information they didn't personally know was true. In December 2009, a GMAC employee said in a deposition in a foreclosure case filed in West Palm Beach, Florida, that his team of 13 people signed about 10,000 documents a month without verifying their accuracy.
The attorneys general began negotiating first with the five largest servicers because they held almost 60 percent of home loans, Miller has said.
Bank of America, JPMorgan, New York-based Citigroup, San Francisco-based Wells Fargo and other mortgage servicers have also been required by the Office of the Comptroller of the Currency to improve their foreclosure procedures. The OCC in April 2011 announced enforcement actions against the companies for "unsafe and unsound" practices related to loan servicing and foreclosures.
"They fueled the downward spiral of our economy and of communities nationwide," Holder said today of bank practices. "They eroded faith in our financial system. And they punished American taxpayers who have had to foot the bill for foreclosures that could have been avoided."