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Boy, did my phone ring off the hook last week with people wanting to know about the mortgage settlement and what it could mean for their situation. I have two basic responses. 1. It’s too early to tell because the details haven’t been worked out. 2. The settlement is too small to make much difference for most people.

In regards to the details, it’s going to be a while until we know exactly how the $25 billion will be spent, and who qualifies. For information, you can go to www.NationalMortgageSettlement.com but even that website admits that borrowers will not immediately know whether they are eligible. Within the next 30-60 days, an administrator will be chosen to oversee the settlement. Eligible homeowners will be identified over the next six to nine months, and will be notified by mail. They have three years to disburse the funds.

There are three areas where they will try to help: 1. More and better loan mods, including some principal reductions. 2. Ability to refinance at current interest rates for those who are current but upside-down. 3. Cash payments for those who lost their home to foreclosure, but this may only be $1,000 to $3,000 each.

The settlement may only apply to loans that are still held by BofA, Citibank, Chase, Wells Fargo, and Ally/GMAC. This means if they sold the loan off to an investor, the settlement may not apply because they are only “servicing” the loan. Loans owned by Fannie Mae and Freddie Mac are also not included. This leaves a LOT of loans out of the mix. With some accounting “magic” and for taking losses on loans they were already going to take a loss on, I’m afraid that the $25 billion will evaporate rapidly without making much of a difference for the majority of borrowers.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty