Legal settlement over alleged foreclosure abuses could help about 1 million

The government and banks are “very close” to reaching a legal settlement over alleged foreclosure abuses that could help about 1 million underwater borrowers get mortgage relief, U.S. Housing and Urban Development Secretary Shaun Donovan said on Wednesday.

“We’re very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help,” Donovan said in response to a question during a forum at the Winter Meeting of the U.S. Conference of Mayors in Washington.

Talks between federal and state officials and major lenders aimed at resolving allegations of illegal foreclosure practices have dragged into their second year.

Some states, including California and New York, have criticized negotiators as being too lenient on the banks and suggested the proposed settlement would not provide enough relief to the housing market.

But the Obama administration has seen the broader foreclosure settlement as an opportunity to help reach more borrowers struggling financially as the five-year drag in housing persists. Currently, banks have granted at-risk borrowers principal reductions on a limited basis.

“Principal reduction can have a substantial impact on the housing market nationally,” Donovan said.

He said about 1 million write-downs are expected, and a number of families would also “get direct compensation as a result of the settlement.”

 

The author of this article is: msnbc.msn.com

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