The deal gives 5 major services-NOT NECESSARILY THE BANKS, incentives to write down the loans of severely upside down homeowners. Most of these home loans are not owned by the banks and might trigger litigation by the investors whose money it actually is.
CA. was a big deal in this because they refused an earlier proposal and demanded greater writedowns.
The problem with this settlement is that fewer than 5% of the loans will be eligible and none of them include mtg written by fha and fannie mae. Only 5 servicers are involved.