This settlement primarily affects mortgages that are owned and held by the nation’s largest bank servicers. Those homeowners may receive benefits such as modifications, principal reductions or direct payments from lenders.
Two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, control a majority of the nation’s mortgage loans. GSE loans are not eligible for parts of this settlement because of positions their regulator, the Federal Housing Finance Administrator (FHFA), has taken.
However, homeowners with GSE-controlled mortgages who won’t directly benefit from settlement-related programs – that’s most homeowners – will still see benefits through reduced foreclosures, stabilizing home values and significant new mortgage servicing standards and consumer protections.
This settlement, in addition to recent federal efforts to modify Freddie and Fannie loans, means that there’s an outside chance that the majority of distressed borrowers might qualify for some level of help.