Arizona to get more than $1.6B in mortgage deals

PHOENIX - Arizona will get more than $1.6 billion to relieve underwater homeowners in settlements for two mortgage fraud lawsuits.

The state signed late Wednesday night to a 49-state deal with the nation's biggest mortgage lenders over foreclosure abuses that occurred after the housing bubble burst.

Arizona Attorney General Tom Horne says that state will get $1.6 billion as part of that deal.

In addition the national settlement, Horne says Arizona is set to get $10 million in a separate lawsuit with Bank of America Corp.

The lawsuit accused the bank of misleading and deceiving homeowners who've tried to modify their mortgages, and alleged the bank foreclosed on homes after assuring owners that their loans were being modified and they could continue to make payments.

Horne announced the settlements on Thursday morning.

The settlement will provide $1.3 billion for principle reduction, $86 million for borrowers to refinance, and payouts to those who have foreclosed from roughly $1,500 to $2,000.

Real Estate experts like Mark Stapp at ASU's W.P. Carey School of Business are skeptical.

"There isn't a mechanism in place to assure that the banks go through with the terms," he said.  "It has to be efficient and quick in order for it to do any good."

The terms would only apply to loans the banks involved currently hold, not those that have been sold off since.

Horne said the terms would need to be initiated by the banks and full-filled in three years.

"There will be changes in the way loans are serviced and good policing mechanisms including stiff fines for those who do not abide by them," he said.