You are hereLA Times: Mortgage settlement is too little, too late for many

LA Times: Mortgage settlement is too little, too late for many

Some who suffered foreclosures say the payouts are a pittance, and many homeowners in trouble won't qualify for help.

-By Tiffany Hsu

February 7, 2012- The massive mortgage settlement may be setting new national standards for loan servicing, but it may be too little and too late to help troubled homeowners.

Many homeowners will see reductions in the principal they owe on their mortgages. In California, those who endured foreclosure probably will see checks averaging $1,500 to $2,000.

"It's a form of very rough justice," said Paul Leonard, director of the Center for Responsible Lending's California office. "There's really no screening to determine whether these were wrongful foreclosures; they're going to give something to everybody regardless of the circumstances."

But to underwater homeowners such as Samuel Guzman, whose three-bedroom Westminster home was foreclosed in August, it's all "too little too late."

"It's not going to solve the problem," said the hairdresser, who along with four family members is trying to avoid eviction. "It's not going to make things right."

Guzman, 61, bought the home in 2001 for $211,000. When he added a room several years later, he took out a risky, adjustable-rate loan, which he quickly realized was "a balloon that was going to explode."

But he was locked in. By mid-2009, he was running behind on payments. Wells Fargo Co. rejected his loan modification application five times, he said. Guzman said he tried to pay off some of his $500,000 debt with a Treasury bill, which he said Wells Fargo declined.

He hired a lawyer. No luck: The bank foreclosed on the home in August and began threatening eviction.

So in December, Guzman filed for bankruptcy as "a kind of hail Mary to keep from being locked out." He's put "No Trespassing" signs in front of the property in an attempt to keep authorities away.

But just in case, he's slowly clearing out his furniture.



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