The National Mortgage Settlement Agreement, signed into action a couple of weeks ago, is still being developed and fleshed out as we speak. With that being said, the main emphasis – the $26 billion owed to states, the federal government, and individual homeowners all across America – is set in stone; what is to be developed now are the particulars of how much money goes to whom, and when that can be expected to occur.
Of the total, Washington will receive approximately $648 million split in a few different ways. Roughly $455 million will go toward principal reduction for qualified individuals. $70 million is slated to go toward existing refinance programs; $45 million in direct payments for victims of foreclosure; and $24 million for foreclosure relief programs.
This overall $648 million amount is included in the total $26 billion amount, which is broken down (so far) as follows:
- $17 billion in principal reduction and loan modifications, including refinancing
- $3 billion for homeowners who are current on their loans but are underwater (have negative equity)
- $1.5 billion in direct payments to victims of the foreclosure process, divided up among an estimated 750,000 borrowers (which works out to $2,000 per victim)
- $4.25 billion in payments directly to the states
Of this last number, $1.5 billion will go to compensate borrowers who were victims of mortgage servicing abuse. The remainder - $2.75 billion – will go toward foreclosure prevention programs in the states, including legal aid, mediation, and counseling.
One thing in particular to note is the $17 billion figure – easily the largest individual component of the deal. This number is a minimum, which means it could be higher. In fact, many experts predict the total amount could rise as high as $32 billion, given the widespread need for funds.
It must be said that the settlement is still being finalized. It is not likely that the numbers will change dramatically, but the actual terms of eligibility and the timelines for payment could vary depending on certain factors. As it stands now, most state officials expect an administrator to be appointed over the deal over the next month or two. Over the next 6-9 months, officials expect to identify eligible recipients and then disburse the funds over the next three years.