California pulls out of foreclosure talks

The state of California pulled out of multi-state mortgage negotiations with large US banks, dealing a sharp blow to long-running efforts to secure a broad settlement over allegations of lending abuses. California Attorney General Kamala Harris wrote in a letter on Friday that she will pursue her own investigation. "California was being asked for a broader release of claims than we can accept and ... the relief contemplated would allow too few California homeowners to stay in their homes," Harris said in the letter to government officials leading the talks. New York had exited the talks in August over a disagreement about how much legal immunity the banks should receive in any settlement. Representatives of the banks met with Harris last week in an attempt to keep California on board. The state has faced some of the worst default rates in the country, with an unemployment rate of 12.1% and two million residents who owe more on their mortgage than their home is worth. Eight of the 10 hardest hit US cities in terms of foreclosure rates are in California, Harris said. State and federal officials have discussed penalties totaling roughly $20 billion from institutions that include Bank of America,
JP Morgan Chase, Wells Fargo and Citigroup.