California Mortgage Settlement $6 Billion Less than Claimed

On February 9, California Attorney General Kamala Harris announced that California was going to receive $18 billion from mortgage lenders as part of the landmark settlement reached with the federal government last week. However, the figure is more like $12 billion, which is obviously $6 billion less than what was touted.

How did this $6 billion discrepancy come about? The Attorney General's office explained that there are two ways to calculate California's settlement funds:

One is the credit banks will get for assisting homeowners, as well as direct payments to foreclosed homeowners and to state governments. That’s estimated at $25 billion nationwide and about $12 billion in California.

The other way to calculate settlement funds is the actual value to homeowners – the dollar value of mortgages they will not have to repay – which has been estimated at $40 billion nationwide and $18 billion in California.

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