Mortgage deal could bring billions in relief
On Thursday, federal and state officials announced a $26 billion foreclosure settlement with five of the largest home lenders.  California is expected to receive approximately $12 billion in principal write-downs, including through short sales, over the next three years, according to the state attorney general’s office.

Making sense of the story

• The deal settles potential      state charges about allegations of improper foreclosures based on      robo-signing, seizures made without proper paperwork.
• The settlement sets up a      federal monitor to oversee the process and try to prevent the challenges      that tripped up many homeowners seeking help in earlier programs designed      to address the housing crisis.
• Most of the relief will go      to those who are underwater on their homes.  That relief will come      over the course of the next three years, with banks having incentives to      provide most of the relief in the next 12 months.
• At least $17 billion will go      to reducing the principal owed by homeowners who are underwater and behind      on their mortgages.
• Up to 750,000 other      underwater homeowners who are current on their mortgages will be able to      refinance their current loans at lower rates.  They will not receive      a reduction in principal, but with mortgage rates near record lows, they      could receive substantial savings on their monthly payments.
• Approximately $1.5 billion      will go to homeowners who had their homes foreclosed upon between Jan. 1,      2008 and Dec. 31, 2011, and who meet other criteria.  They will      receive up to $2,000 each.
• The five mortgage servicers that are parties      to the settlement include Bank of America, JPMorgan Chase, Citigroup,      Wells Fargo, and Ally Financial (formerly GMAC).

President Obama details plan to help responsible homeowners
In his State of the Union address, President Obama laid out a plan to help responsible borrowers and support a housing market recovery.

Key aspects of the president’s plan include:

• Broad-based refinancing: The president’s plan      will provide borrowers who are current on their payments with an      opportunity to refinance and take advantage of historically low interest      rates
• Homeowner Bill of Rights: The president is      putting forward a single set of standards to make sure borrowers and      lenders play by the same rules, including: Access to a simple mortgage      disclosure form, so borrowers understand the loans they are taking out;      full disclosure of fees and penalties; guidelines to prevent conflicts of      interest that end up hurting homeowners; support to keep responsible      families in their homes and out of foreclosure; and protection for      families against inappropriate foreclosure, including right of appeal.
• First pilot sale to transition foreclosed      property into rental housing: The FHFA, in conjunction with Treasury and      HUD, is announcing a pilot sale of foreclosed properties to be      transitioned into rental housing.  C.A.R. is opposed to bulk sales of      REO properties in California.
• Providing a full year of forbearance for      borrowers looking for work: Following the administration’s lead, major      banks and the GSEs are now providing up to 12 months of forbearance to      unemployed borrowers.
• Pursuing a joint investigation into mortgage      origination and servicing abuses: This effort marshals new resources to      investigate misconduct that contributed to the financial crisis under the      leadership of federal and state co-chairs.
• Rehabilitating neighborhoods and reducing foreclosures:      In addition to the steps outlined above, the administration is expanding      eligibility for HAMP to reduce additional foreclosures, increasing      incentives for modifications that help borrowers rebuild equity, and is      proposing to put people back to work rehabilitating neighborhoods through      Project Rebuild.

C.A.R. and NAR support the Obama Administration’s efforts to help homeowners and the struggling housing market, because restoring the health of the housing market is critical for the nation’s economic recovery.