In March, Attorney General Harris tapped Katherine Porter, a University of California, Irvine, law professor who is one of the nation's leading academic experts on mortgage servicing, to monitor the settlement's implementation in California.
Inside the law school on UC-Irvine's campus, Porter oversees a team of 11 employees, including seven lawyers. One of their key responsibilities is pursuing complaints lodged by California homeowners.
Porter and her staff represent another advantage that California holds as the five big banks are distributing benefits across the country. Although the settlement has a national monitor — former North Carolina Banking Commissioner Joseph Smith holds that job — no other state has established an office dedicated to ensuring that its residents get relief.
The California office's employees are assigned to different banks, and when they receive a consumer complaint, they often reach out directly to the bank in an effort to resolve the problem.
Their letters can't be easily ignored: under the California side deal, if the three banks fail to meet their obligations, they are on the hook for hundreds of millions of dollars in payments to California's state government.
As of early December, the office's database had 2,167 complaints, which the monitor receives directly, as well as from the Attorney General's Office, consumer attorneys and housing counselors.
Some borrowers are seeking a principal reduction, some want monthly payment relief, while others want their servicer to halt the foreclosure process while the loan modification process is under way.
"I do a lot of loan-level investigation," Porter explained in an interview. "It is the key that unlocks robust enforcement."
Porter is an energetic Elizabeth Warren protégé who gets excited talking about finding ways to improve the mortgage servicing process, long notoriously unfriendly to consumers.
"We never say to a servicer, 'This is bad. Fix it.' We say, 'This is bad. Here is a way that you could fix it. Does that way work for you?'"
In an interview, Smith, the national monitor, said Porter's group has helped him keep tabs on the servicers to make sure they are honoring their end of their settlement.
The national monitor's office does not investigate individual complaints in the way that California does. When asked if Porter is bringing specific homeowners' cases to his attention, Smith responded drily. "Only every day," he said.
The Impact Elsewhere
California is not the only state that left the settlement negotiations with a sweetened deal, but it did blaze the trail. In Florida, Attorney General Pam Bondi secured a side deal that was modeled so dutifully on California's agreement that no one even bothered to change the document's font.
Under that agreement, B of A, Wells and Chase guaranteed they would provide $4 billion in consumer relief to Floridians. That's not as favorable as California's $12 billion commitment, but an analysis of mortgage market data suggests that Floridians are faring better than they would have done under a more equitable deal.
Through September, Florida homeowners received 16.5% of the consumer relief awarded nationwide under the settlement, according to the national monitor's report.
For comparison, Florida is home to 6.1% of the nation's population, has 8.7% of the nation's foreclosure completions, 15.6% of the nation's foreclosure starts, and 16.7% of the nation's underwater homes, based on the same data sources as were used for California.
Nevada reached its own side deal with Bank of America, settling a lawsuit previously filed by the state, and requiring B of A to set aside $750 million in consumer relief for its residents. "The settlements are in proportion to that of California," the Nevada Attorney General's office boasted in a Feb. 9 press release.
According to the most recent data, Nevada has received 4.2% of the consumer relief delivered nationwide. That's larger than Nevada's share of the U.S. population, its share of underwater mortgages, of foreclosure starts and completions, and of total negative equity.
The nationwide mortgage data do carry a couple of caveats. Those numbers are based on a broad view of the market, whereas the consumer relief portion of the national settlement excludes loans owned by Fannie Mae and Freddie Mac, as well as those serviced by firms outside the industry's top five.
So if one of the top five banks has a larger-than-average servicing footprint in a particular state such as California, it would make sense for that bank to be providing more consumer relief to Californians. Data on the geographic breakdown of each servicer's portfolio is not publicly available.
Still, it's hard to escape the fact that the three states that cut deals to guarantee a share of the $20 billion are getting more than the various nationwide mortgage metrics suggest they should.
Iowa AG Miller defended the settlement by saying, "States like Ohio didn't have the huge bubble that California, Arizona, Nevada and Florida had, so that does have an impact."
But Arizona, one of the states hurt most by the foreclosure crisis, has not fared as well as the three so-called sand states that negotiated side deals.
Arizona has 2.1% of the U.S. population, 4.2% of the negative equity nationwide, 4.8% of the underwater mortgages, 5.7% of the foreclosure completions and 5.8% of the foreclosure starts.
Through September, Arizona had gotten 4.5% of the settlement's consumer relief — within the range of what the data suggest it should receive, but not more.
Many other states are faring worse.
For example, Georgia has received only 2.2% of the nationwide consumer relief — despite having 3.1% of the U.S. population, 3.7% of the nation's negative equity, 4.8% of the underwater mortgages, 5.6% of the foreclosure starts, and 5.7% of the foreclosure completions.
"We don't have our side agreements. We don't have our own monitor," said John O'Callaghan, president and chief executive officer of the Atlanta Neighborhood Development Partnership. "The squeaky wheel gets the oil."