As part of the National Mortgage Debt Relief settlement, 5 banks have been busy fulfilling their obligations to affected homeowners. In California alone, nearly $9 billion has already been shelled out to make an impact on a struggling housing market. Interestingly, one particular type of mortgage debt relief is dominating in California.
California residents affected by the foreclosure crisis or at risk of foreclosure have seen lenders turn over a new leaf. Many banks are now offering homeowners easier access to foreclosure help, the most popular of which has become short sales. So far, about two-thirds of the $ 9 billion has come by way of short sales. Between March and September of this year close to $6 billion in assistance has been allocated to short sales alone. California borrowers have been able to sell their homes and move on, often without a penalty of the deficiency balance.
The second most popular form of mortgage debt help offered under the national settlement is second lien forgiveness. $805 million has gone towards erasing debts on second mortgages for struggling California homeowners. Although the banks stand to lose more of their stake through loan forgiveness, the five banks have been reportedly doing better than anticipated at reaching those in need.