The $25 billion National Mortgage Settlement has been criticized as a “drop in the bucket” toward relief for homeowners abused by foreclosing lenders and some critics wonder if it’s even a drop.
Just out, “First Take: Progress Report from the Monitor of the National Mortgage Settlement,” by settlement overseer Joseph A. Smith Jr., appears as if nearly half the $20-billion allotted for consumers (governments get $5 billion) has gone to only 138,000 homeowners, which would make it impossible for the program to reach the million or more originally targeted.
A report disclaimer reveals the $10.56 billion reported to Smith by banks as financial relief isn’t actually cash spent, but debt forgiveness, principal reductions, savings from mortgage modifications, second mortgage write-offs and other mortgage cost-reducing efforts.
“The $10.56 billion in consumer relief reported here cannot be used to evaluate progress toward the $20 billion obligation in the settlement. Furthermore, neither I nor the professionals working with me have audited or conﬁrmed these ﬁgures,” writes Smith.
While consumers may spend less cash on their mortgage after lender relief reported in the “First Take,” critics say lenders haven’t come out of pocket for the efforts, except perhaps to record losses on their books – something lenders were already doing long before the settlement.
The California Reinvestment Coalition says banks’ actions amount to little more than “business as usual.”
“The progress report reveals that banks have made little progress on providing principal reduction to California homeowners, and instead have prioritized short sales, a tool that represented business as usual for banks before the settlement was ever announced,” the Coalition claims in a press release.
The Coalition says only 2,334 California borrowers have received only 2.7 percent of the $12 billion in principal reduction that Californians were promised in the settlement. Banks are required to get the total $12 billion in principal reduction to Californians by 2015.
Given the settlement was designed as a punitive measure, critics question if the efforts included in “First Take” are in good faith in the true spirit of the settlement.
States have also been dipping in the mortgage settlement till.
David Dayden, Fire Dog Lake blogger, explains to RT News what he believes is happening.
“There is a bit of gaming the system going on,” Dayden says.
Watch the video.
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