Still playing catch-up here, so bear with me. But of the many articles on the subject of housing that bubbled up to my attention while I was away – and thanks to all who filled in, particularly Abigail Field, who had some emergency issues during the two weeks and still performed admirably – I wanted to take note of this one story from last week, about the fact that the foreclosure fraud settlement is only a three-year agreement, meaning that all the vaunted reforms of the servicing market end up expiring at the end of the time period.

But the legal agreements among the banks, and the states and federal government hold for only three-and-a-half years; the pledge runs out in 2015. Now many of these banks are battling California Attorney General Kamala Harris over her push to make permanent some of the settlement’s most important “servicing standard” reforms by writing them into state law.

“The success of the national mortgage settlement in terms of reforms is laudable, but it only lasts for three years,” Harris said. “We need to make the fixes permanent.”

Banks do not seem to agree. The California Bankers Association, along with four of the five banks that settled the abuse investigation by federal and state governments in March — Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo — spent about $500,000 on lobbying efforts in California during the first three months of 2012, according to state disclosure records. It is not possible to tell from disclosure forms how much of that money was spent to influence the pending mortgage legislation, but state officials who support the legislation said lobbyists for all the settling banks except for Ally, which is much smaller than the rest, have spoken out against the proposed laws.

Specifically, banks are resisting a series of homeowner protections making their way through the California legislature, and I should have more on that this week. Suffice it to say that the problem there are Democrats, including one trying to move up into Congress backed by labor support. But that lobbying effort would have happened whether the agreement lasted three years or not, and I would argue it’s not the major effort the banks must defeat as far as servicing goes. They need to derail the Consumer Financial Protection Bureau’s Dodd-Frank-mandated rewrite of the rules for servicing.

See, the real truth is that the servicing reforms in the settlement are superfluous, rather than just time-limited. CFPB has a Congressional mandate to consolidate and write the rules on the servicing industry. That includes rules which internally conflict, like the settlement and existing rules from FHA. CFPB is supposed to wade through this and shape final rules for the marketplace. They’ve already started this process last month, by releasing a comprehensive set of rules under consideration. The plan is to finalize these rules by January, before the next inauguration. This is what would rebuild the servicing sector from the ground up, not piecemeal efforts in various states, even a state as big as California.

So yes, the fact that regulators are touting “tough standards” from the settlement that the banks can just wait out is a bit embarrassing. But that’s not the center of this fight. The CFPB process will be much more determinative. And CFPB did a couple good things over the last couple weeks, including launching a public inquiry into forced arbitration clauses in consumer financial contracts. If there’s one arm of the federal government that could be handed the responsibility to reset the servicing industry, I’d want it to be them. It doesn’t mean they’ll succeed, but they’ll at least have a chance.