As lawmakers and industry experts continue to weigh the pros and cons of implementing write-downs for mortgage borrowers, analysts from the Brookings Institution found that 5 percent of underwater homeowners would be able to qualify for such a measure using funds from the settlement reached between the nation's largest lenders and a number of state attorneys general offices.
According to the Brookings Institution, this estimated 5 percent would account for roughly 500,000 borrowers being able to capitalize on the $25 billion mortgage settlement. While this is a notable number of homeowners, mortgage records show there are still 11.1 million underwater borrowers.
An estimated $10 billion of the total mortgage settlement with the major banks is expected to assist struggling homeowners, granting them principal write-downs. However, some experts are still skeptical about how many borrowers the settlement will reach.
"While we understand that there is an interest in a definitive number of borrowers who might quality for principal reduction, we don't yet have that solid number and cannot confirm the author's estimate," said a spokesman for the Office of Iowa Attorney General Tom Miller. "I also note that there are other elements to the settlement that the author has not taken into account."