Local Mortgage Lender Says National Settlement Won't Go Far Or Fast Enough

It could be months before distressed homeowners in Texas see any relief from the settlement with the nation's five largest mortgage lenders. The state is in line to get $428 million. That money will go to write down loans, pay for loan refinancing, and cover fines for breaking state laws.

Stacy London is president of Houston Capital Mortgage. She says one of the good things about the settlement is that 49 states agreed to it. Also, homeowners are still able to take action on their own against mortgage servicers that broke the rules. But London says the collective $25 billion settlement isn't big enough, and a larger portion of it should have been allocated to principal write downs.

"Because so much of the problem going on across the country is that people are so underwater on their mortgages, that they're just unable to do anything with their property. And the principal write-down component is so important, so that they're not owing 150 percent of what the property's worth."

About a third of the state's share of the settlement will go toward punitive fines. That money will go straight to the treasury.   London says she has an idea for how lawmakers should spend that money.

"Rather than filling coffers across the country, although I sympathize — state budgets across the country are suffering — that it would be good if maybe states look at some programs for what they might be able to do with their foreclosure settlement, so that some of this money could be used toward homeowners."

London says the settlement will benefit only about 100,000 Texas homeowners in need of a principal write-down or refinanced loan.


 

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David Pitman

Local Host, Morning Edition

The one question David hears most often isn't "What is it like to work for an NPR member station?" or "Have you ever met Terry Gross?" (he has)...