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In this country, a settlement involving five major banks is the latest of many efforts to help fix the housing market. Nearly all the states teamed up and extracted a promise of $25 billion to help troubled homeowners reduce their mortgage payments. The banks are making the payouts after admitting to taking shortcuts by robo-signing documents to force through home foreclosures. The question now is whether this solution will work, after so many other answers to the housing crisis did not.

Here's NPR's Yuki Noguchi.

YUKI NOGUCHI, BYLINE: There are two big ways this settlement differs from previous programs. For one, it's the first large-scale program that includes principal reductions. Banks will be required to do partial loan forgiveness. Homeowners owing more than their homes are worth could get their heads above water again.

Secondly, it's a settlement, and compliance from the lenders is mandatory, which distinguishes it from other programs which have been voluntary. For those reasons, Housing and Urban Development Secretary Shaun Donovan has high expectations.

SHAUN DONOVAN: We think it's 2 million families that could benefit. And it's the single most important step to principal reduction. So we have to make this work.

NOGUCHI: Donovan was speaking at an event in front of hundreds of housing counselors last week who are part of the National Community Reinvestment Coalition. Funded by government and nonprofit money, these counselors offer free assistance to homeowners who are trying to negotiate the often frustrating and time-consuming process of getting a mortgage modified. Counselors are the boots on the ground. And Donovan says homeowners are twice as likely to stay in their homes if they use one. But Pamela Stalling says her boots feel sluggish.

PAMELA STALLING: There's so much confusion, there's a program here, this settlement, and then you hear the bank settlement, then you hear about the Obama plan, that didn't work. So the issue is just getting a clear message out to the consumer.

NOGUCHI: Stalling is a housing counselor in Hammond, Indiana. She says counselors like her haven't received the information they need about what to do or who qualifies under the national bank settlement. That is typical, says Carolyn Thomas. Thomas is director of housing counseling for the Sacramento Urban League. She says someone trumpets a new program. There are press conferences. Then it takes lots of time for the specifics and the money to trickle down to those who actually need it.

CAROLYN THOMAS: Well, there is a level of frustration out there, not only among the community, but also amongst the housing counselors. Because to do it right, and to do it in a way that's going to be very - I mean, really beneficial in a real way, takes time. Time takes money. And we don't have it.

NOGUCHI: But wait, you ask. What about the $25 billion? That includes a requirement that banks do $17 billion worth of principal write-downs, plus another $3 billion in refinancings. But Thomas's frustration is that in order to access that money, banks, counselors and consumers need good information and a clear process to follow.

Are you optimistic that the AG settlement is going to be different from all the programs that came before?

THOMAS: No. I think it wants to be, you know. And I think it looks great on paper.

NOGUCHI: Thomas and others had hoped another portion of the settlement - $2.6 billion that has already gone directly to the states - would help hire more counselors. But some governors and state attorneys general are now saying they need that money to fill budget gaps and pave roads.

Another big concern is that lenders still don't have the staff to handle the volume and the complexity of the applications that will flood in. That's exactly what plagued earlier loan modification efforts. Joseph Smith is the man appointed to oversee the national bank settlement.

JOSEPH SMITH: Implementing uniform standards throughout their mortgage system is a significant management challenge for these organizations. So I think that's - the issue to me is how quickly that can all be done and effectively it can be done. And the banks are concerned about it, by the way. They're working hard to do this.

NOGUCHI: Both Smith and the banks will collect data to show how effective this program is. His first report will come out this fall.

Yuki Noguchi, NPR News, Washington.

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