LAKE COUNTY, Calif. – A settlement the California Attorney General’s Office has reached with five banks is expected to bring tens of millions of dollars of assistance to Lake County homeowners hit by the foreclosure crisis.

Last week Attorney General Kamala Harris announced the commitment of up to $18 billion by the banks to benefit hundreds of thousands of homeowners in California, the state hardest hit by the mortgage meltdown of the last several years.

The banks included in the settlement are Bank of America, JPMorgan Chase, Citibank, Wells Fargo and Ally Financial.

Those banks also are known under other trade names, including Countrywide (a trade name for Bank of America); Washington Mutual and EMC Mortgage (Chase); CitiMortgage (Citibank); Wachovia (Wells Fargo); and GMAC (Ally Financial).

“California families will finally see substantial relief after experiencing so much pain from the mortgage crisis,” Harris said in a written statement. “Hundreds of thousands of homeowners will directly benefit from this California commitment.”

The settlement calls for county-specific payments based on the number of homeowners and the depth of the foreclosure crisis in the particular areas.

The five counties expected to receive the largest benefit amounts are Los Angeles, $3.92 billion; Riverside, $1.59 billion; San Bernardino, $1.13 billion; Sacramento, $820 million; and Stanislaus, $368 million.

In Lake County, where thousands of homeowners have lost their homes or gone underwater on their mortgages, an estimated $43.7 million in relief is expected, the Attorney General’s Office told Lake County News.

Neighboring Sonoma County is expected to receive $267 million, while Napa is slated to receive about $79.3 million and Yolo $74.5 million.

Lake’s other neighboring county’s are estimated to receive less. Colusa’s expected amount is $8.9 million; Glenn, $7.3 million; and Mendocino, $25.8 million.

“The impact of the foreclosure on that community was one of the factors” in determining amounts counties would receive, said Linda Gledhill, an Attorney General’s Office spokesperson.

The settlement calls for more than $12 billion to reduce the principal on loans or offer short sales to approximately 250,000 California homeowners who are underwater on their loans and behind or almost behind in their payments.

If the banks fail to enact at least $12 billion in principal reductions for California homeowners, they face up to $800 million in payments to the state. The settlement also allows Harris to summon the banks to California state court to enforce the obligations.

In addition, $849 million is estimated to be dedicated to refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans, the Attorney General’s Office said.

The agency said another $279 million will be dedicated to offering restitution to approximately 140,000 California homeowners who were foreclosed upon between 2008 and Dec. 31, 2011.

Other settlement terms include an estimated $1.1 billion to be distributed to homeowners for unemployed payment forbearance and transition assistance, and to communities to repair the blight left by about 16,000 recent foreclosures; $3.5 billion to relieving 32,000 homeowners of unpaid balances remaining when their homes are foreclosed; and $430 million in costs, fees and penalty payments.

Homeowners urged to prepare

The settlement does not start immediately, but must be approved by a U.S. district court judge, who has to name a federal monitor, according to the state.

However, in preparation for that final approval, Gledhill said homeowners should start to get their information together immediately in order to apply for assistance.

“We’re encouraging people to start this process now,” said Gledhill.

The Attorney General’s Office’s Web site has an in-depth frequently asked questions section on the national mortgage settlement at https://oag.ca.gov/nationalmortgagesettlement/faqs.

More information also is available at http://www.nationalmortgagesettlement.com/.

Gledhill said homeowners seeking help first need to know who owns their mortgage. If it’s one of the five banks covered in the settlement, they should contact that bank directly and start talking to them about receiving assistance.

She said some of the banks involved have indicated that they will set up consumer assistance centers to aid homeowners in the process.

The Attorney General’s Office intends to make sure the banks follow through on the requirements, Gledhill said.

Harris has said she will appoint a monitor to follow how the banks enact the settlement in California.

The Attorney General’s Office also is expanding its Mortgage Fraud Strike Force, which currently has more than 42 members, to speed mortgage-related investigations and strengthen resulting prosecutions. It also will continue an investigative alliance with Nevada, which allows for the sharing of resources and strategies.

Harris’ office also announced that she plans to propose a comprehensive legislative agenda to protect homeowners in the mortgage market.

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