Will the $25 Billion Mortgage Settlement Help Homeowners?

     I was reading about this issue on google and found it very interesting.  The five major home lenders in the U.S. have been forced to pay a combined total of $25 billion in fines for failing to properly process home loan modification applications.  Being from California, I witnessed this ordeal first hand.  My in-laws as well as several friends and family were promised that their loan modification applications would be approved and that they didn't need to worry about making payments.  Several months later they were all forced out of their homes with thirty days to vacate.  Now, three years later, the government is stepping in and trying to do something about it.  According to this article on huffingtonpost.com, up to one million homeowners will benefit from this settlement through the actions of lowering payments, reducing principal balances on loans and offering unemployment forgiveness.  This sounds great, but this article on cbs.com points out the fact that over eleven million homeowners are currently underwater on their mortgages which means that, even at its best, this settlement won't even help 10% of these Americans.  Another issue that was mentioned by CBS is that there are many restrictions on what loans can will be eligible for benefits under this settlement.  For example, loans owned by Fannie Mae and Freddie Mac do not qualify.  These loans consist of nearly a third of all mortgages that are currently upside down.  Only loans owned by the five major banks qualify, so if you don't have a loan through them you will not be getting any help.  Based on these restrictions, an economist from the Brookings Institution has estimated that no more than 500,000 borrowers will receive assistance.  This is less than five percent of homeowners who are in trouble.  Not to mention this does not include any of those who have already been forced from their homes due to the negligence of these profiteering, scandalizing banks.  Even though it seems as though this settlement will not help as many people as originally intended, there are still many people who are enthusiastic that it will help.  According to the Detroit Free Press, HUD secretary Shaun Donovan is excited about the settlement is positive that the minimum, one million homeowners will benefit.  Donovan has been very critical of the banks and has stated that this settlement will not only require the banks to "act" like they are helping borrowers, but it will penalize them for not showing results.  In the end, I do expect to see some assistance to homeowners through this settlement, but after seeing the number of people who have already been forced from their homes due to negligent foreclosures, I think that this administration already let the majority of people they could have helped down.  It is a little too late to start holding these financial monsters accountable for their actions.