Will Foreclosure Deal Hurt Homebuyers?

Will the deal help Santa Fe Real Estate recover faster?

The government’s settlement with five banks today will provide some relief to distressed homeowners, but experts say it could be a setback for future home buyers.

The finalized agreement, which follows a yearlong push to settle allegations of foreclosure abuses by lenders, is worth up to $26 billion and will provide cash payments to borrowers who went through foreclosure over the past few years. It will also forgive some principal for borrowers who owe more on their home than it’s worth. But mortgage experts and bank sources say that in the longer term the settlement could make it harder for many Americans to get a mortgage. “It has the potential to make mortgage credit less available and expensive in the future,” says Bob Davis, executive vice president at the American Bankers Association.

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