California's Attorney General, Kamala Harris, has formally requested that the Federal Housing Finance Agency (FHFA) halt the sale of all foreclosed properties in California. Harris' request follows the 49-state settlement between state governments and the five largest banks. That settlement provides $18 billion in benefits over the next three years to California homeowners, and $12 billion of that is in the form of principle reduction and short sales. Harris wants the FHFA to halt all foreclosure sales until the agency is able to complete a review of its policies on reducing some mortgage debts.
Harris' actions fall far short of what groups such as Occupy have been calling for. Back in January, Occupy Sacramento marched on the Attorney General's office demanding that she impose a moratorium on all home foreclosures in California. And San Francisco conducted an audit of all 400 foreclosed homes within San Francisco County. They found that all 400 foreclosures involved either legal violations or suspicious documentation on the part of the bank. Sacramento similarly has hundreds of foreclosed homes in the area, if all 400 foreclosed homes in San Francisco involved banks acting in either illegal or dubious ways, what about foreclosures in Sacramento? Do we really think the picture is that different here?
While Harris' call for a halt to the selling of foreclosed homes is a start, it doesn't do enough to keep Californians off of the streets and in their homes. Harris signed on to the 49-state settlement with the banks, now limiting her ability to halt foreclosures in the state without being in breach of that settlement. Banks are slowly gaining complete immunity for their disastrous decisions. Even if those decisions were simply acts of ignorance, we live in a society where for most actions have consequences, but apparently that idiom doesn't hold true for banks.
Harris is now trying to recover from this politically embarrassing settlement by requesting a temporary halt on foreclosure sales. While something is better than nothing, it is still a weak effort at appeasing Sacramento homeowners who are struggling with their mortgages. Even if Harris' actions are now constrained by her settlement deal, she needs to take stronger actions against the ongoing foreclosures if she wishes to win back political favor from regular voters.
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