For Some, 'Frustration' Over Mortgage Settlement : NPR

For Some, 'Frustration' Over Mortgage Settlement : NPR
 arlier this month, a judge approved a settlement between five major banks and nearly all of the state attorneys general. The banks admitted to taking shortcuts — or "robo-signing" documents — as they pushed through some foreclosures.
Most of the $25 billion settlement is supposed to go toward reducing mortgage payments for some troubled homeowners. But lots of other programs have promised to help struggling homeowners in the past, and results have been disappointing.
So this latest plan is generating some new hope — and lots of skepticism.
There are two big ways this settlement differs from previous programs. For one, it's the first large-scale program that includes principal reductions. Banks will be required to do partial loan forgiveness. Homeowners owing more than their homes are worth could get their heads above water again.
Secondly, it's a settlement, and compliance from the lenders is mandatory — which distinguishes it from other programs that have been voluntary. For those reasons, Housing and Urban Development Secretary Shaun Donovan has high expectations.
'We Have To Make This Work'
"We think it's 2 million families that could benefit," he said. "And it's the single most important step to principal reduction. So we have to make this work."
Donovan was speaking at an event in front of hundreds of housing counselors last week who are part of the National Community Reinvestment Coalition. Funded by government and nonprofit money, these counselors offer free assistance to homeowners who are trying to negotiate the often frustrating and time-consuming process of getting a mortgage modified.
Counselors are the boots on the ground, and Donovan says homeowners are twice as likely to stay in their homes if they use one.
But Pamela Stalling says her boots feel sluggish. "There's so much confusion. There's a program here, this settlement, and then you hear about the bank settlement. Then you hear about the Obama plan, and that didn't work. So the issue is just getting a clear message out to the consumer."