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Q&A on $25 billion mortgage settlement

Here's a look at what the $25 billion mortgage settlement announced Thursday will and won't do for current and former homeowners:

Q: Who stands to benefit?

A: Most of the money would go to some homeowners who are underwater, owing more on their loan than their home is worth.

Many are struggling to make their payments and are at risk of foreclosure. Yet because they have no home equity, they've been unable to refinance at a lower rate. For about 1 million underwater homeowners, their loan principal will be cut by an average of $20,000. But more than 90 percent of underwater homeowners won't be helped. Some might be eligible to refinance at a rate of 5.25 percent.

Q: How might the settlement help people avoid foreclosures?

A: It requires that banks make foreclosure a last resort and bars lenders from foreclosing on a homeowner who is being considered for a loan modification.

Q: Who's eligible?

A: Those whose loans are owned or guaranteed by private lenders. Roughly half the mortgages in the United States -- about 30 million loans -- are owned by private lenders. The other half are owned by government-controlled mortgage giants Fannie Mae and Freddie Mac. Homeowners with these mortgages aren't eligible.

Q: How will the deal help those who unfairly lost their home to foreclosure due to robo-signing?

A: About 750,000 households -- about half who are eligible for aid under the deal -- could get checks for $2,000 if they lost their homes between 2008 and 2011.


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