Housing Secretary Shaun Donovan Backs Mortgage Settlement Plan

The U.S. Housing Secretary praised the federal-state settlement endorsed by the state’s Attorney General on Friday, saying help is on the way for homeowners facing foreclosure.

New York joined a $25 billion state and federal settlement with five major banks that would resolve claims over "robo-signing" and other abuses of the foreclosure process on Thursday.

The agreement will result in principal and interest rate reductions for millions of Americans whose outstanding balances on their mortgages are worth more than their homes. It also includes provisions to pay down loan principles and that banks have to agree to new set of loan servicing standards

 “It means that if they lose your paperwork, if they foreclose on you wrongly, any of those things, we now have real, hard penalties that are due to the federal government and the states and that will be overseen by an independent monitor with court authority,” Housing and Urban Development Secretary Commissioner Shaun Donovan told WNYC's Brian Lehrer Show on Friday.

Donovan said the banks in the $25 billion settlement, Ally, Bank of America, Citibank, J.P. Morgan Chase and Wells Fargo, account for two out of every three mortgages serviced in the U.S. He said officials are negotiating to get nine more banks to sign onto the deal.

In August, New York Attorney General Eric Schneiderman, claimed the draft agreement would have given banks broad immunity from. Now, Schneiderman has given it his support.