Earlier 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.