More than 130,000 homeowners have received $10.5 billion in relief under the national settlement over foreclosure abuses, according to a preliminary report issued Wednesday by the settlement monitor. Under the settlement in February, reached in response to evidence that the foreclosure process had been riddled with fraud, the country’s five largest mortgage servicers promised $25 billion to help stem the tide of homeowner losses. About $20 billion of that was to be in relief to homeowners, primarily through various forms of debt forgiveness. Short sales are among the simpler forms of relief to provide because banks already have systems in place to handle them and homeowners who want to sell are motivated to seek them out. Principal reduction, on the other hand, requires banks to engage delinquent borrowers who may or may not be able to pay even a reduced amount, and for willing borrowers, it requires paperwork as well as a successful three-month trial period before banks can count them toward the settlement.
– NY Times