Mortgage Settlement: Banks Pay Up

Justice Department brings possible relief for struggling homeowners.
3:54 | 02/10/12

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Transcript for Mortgage Settlement: Banks Pay Up
Good news for homeowners and their mortgages -- -- the Justice Department announced that five of America's biggest banks will be forced to pay a record penalty. 26 billion dollars for their role in the mortgage mess. They will also have to help -- lost more homeowners renegotiate better mortgage terms. So tonight millions of American families are asking this what does it mean for us. How much how soon and ABC's David -- talk to the people who negotiated this deal today Davis. -- you know we've been reporting from day one here on homeowners struggling to get the banks to modify their mortgages and tonight. Here's what's different about this landmark settlement. These five banks have agreed to help homeowners across the board not just the ones missing payments all homeowners were underwater paying more on their mortgage and their -- worth. Hughes for two years now worldnews is reported on homeowners if they -- to -- struggling with the banks the same -- taxpayers bailed out. Begging for help would -- mortgages. You know were raised. To do the right fame -- us. You know we're treated like -- -- number. Thousands if you wrote in the numbers tonight still staggering. One in five Americans with mortgages underwater owing more than their home is now work on average -- 50000 more than what they could sell -- four. Tonight those five banks have now agreed to spend that 26 billion dollars to finally help nearly one million struggling homeowners either refinancing their mortgage rate or modified your mortgage altogether -- as you attorney general Eric -- helped lead the -- with all fifty states such talk about the. Average homeowner when they hear about their mortgage coming down the principal and how much is it compounds. It's going to be done in a case by case basis to 101020. It couldn't could well be could be more. Economists tell us the average homeowner helped could see 20000 knocked off with -- And the rate the American homeowner paying a mortgage rate of -- 7% 175000. In debt. This plan could help bring their mortgage rate down to five point 5% saving them 250 dollars a month 3000 a year. -- and David New Haven reached out to world news just today hoping to -- melt almost rule and its work David trying to modify her mortgage -- three years now. I'm really hoping that it's not just rhetoric and what about the people who lost their homes to foreclosure in some cases by being too fast track foreclosures robo signing them. Without even reading the Paper work. The banks have now agreed to pay some 750000. Homeowners to thousand dollars each. For someone who's lost a home is 2000 dollars really fair things getting off easy must know that -- it's. Not at all meant to compensate people for the loss of a home. Every New York's attorney general pointing out that number is just a penalty not a replacement for the home. And lastly the bigger picture will this settlement make a dent in the overall housing market. Remember that one neighborhood in Phoenix Arizona at the height of the housing bust 130 homes for closed for sale for rent what did they -- their. For 300000. And -- -- -- 130. 130. I think it's gonna help -- enough homeowners and two million homeowners. Stay in their homes and if that happens. I think that'll be enough to get house prices moving north again. Incredible there were 130 homes for sale and that one neighborhood back and that same -- -- are telling me tonight. Now just twenty for -- they've made slow progress and she says. This will no doubt helped Diane but we talk to economists across the board in the bottom line was this it is good but we need many such steps. In order to get housing -- what you were telling me earlier that putrid dollar behind you can get a letter. The bad day gets the banks are being forced even if you're just a dollar underwater on your mortgage to send you a letter -- c'mon man let's take another look at your mortgage and what about those. Freddie Mac -- -- Yeah that's the other half of the population in this country I asked New York's attorney general he said her eyes are on Fannie and Freddie next. So homeowners watching us tonight stay tuned for that -- -- -- in the -- well aren't thinking in the.

This transcript has been automatically generated and may not be 100% accurate.

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