California has joined the national settlement that will provide mortgage relief to struggling homeowners.
Report from NPR's Two-Way blog:
According to (NPR reporter) Yuki Noguchi, California was the last state to sign on to the deal. Now, she tells our Newscast Desk, "in exchange for a kind of immunity from many types of mortgage-related lawsuits, the banks will have to pay about $5 billion in cash" and write down, refinance or reduce the principal on more than $20 billion worth of home loans. "Some estimates say as many as 1 million homeowners who owe more than their home is worth, could be eligible for some sort of payment reduction."
As Yuki has also previously explained, the bulk of the money:
"Would go toward writing down principal payments for homeowners who were not foreclosed upon, but who are struggling now. ... The way it would work is that the banks would have targets they have to meet, in terms of what kinds of loans they would have to modify. But the banks would still have a lot of discretion in who gets what.
"And there's another $5 billion in cash, part of which would go to the states to help fund homeowner assistance programs. Some of the rest would go to homeowners who may have been wrongfully foreclosed upon. For them, it's up to $2,000 each, which is not much if you lost your home."
Speaking to KQED's Cy Musiker, George Goehl of the National People's Action, a collection of community housing groups, also criticized the agreement saying $25 billion for homeowners would be a "paltry down payment," considering that roughly 11 million homes are underwater by a combined $750 billion.