I-TEAM: Federal Mortgage Assistance Won't Help All - 8 News NOW

I-TEAM: Federal Mortgage Assistance Won't Help All

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LAS VEGAS -- A $25 billion deal with the nation's five biggest banks to settle widespread foreclosure abuse promised to help Nevada homeowners.

But many have questioned whether the $90 million set aside for Nevada will amount to much in the way of relief.

The State's Plan to Help Consumers with the Settlement Money

Nevada Attorney General Catherine Cortez Masto initially balked at the settlement. But when push came to shove, Cortez Masto, like every other Attorney General, signed on.

The $90 million is only a fraction of the billions of dollars lost by Nevada homeowners.

Read More on the Desert Underwater

At public appearances in recent months, Cortez Masto has described the $25 billion national mortgage settlement as a first step.

"It is not the final step," she said. "We are still moving forward in addressing mortgage fraud in the state. We are still moving forward in my office to bring relief to homeowners."

Cortez Masto initially stood with a handful of holdouts, such as California Attorney General Kamala Harris and Delaware Attorney General Beau Biden, who were critical of the deal to relieve the nation's five biggest banks of civil liability for fraudulent foreclosure practices.

But in February, Cortez Masto joined 48 of her peers -- Harris and Biden included -- in the agreement that's expected to benefit only a fraction of homeowners.

John Kelleher supervised the Attorney General's Mortgage Fraud Task Force until his recent resignation from the office.

"It was a political and financial gun to the heads of all the attorney generals," he said. "It seems like the people have been sold out and not by AG Masto. I'm saying, by a system that lets the federal government ram bad deals down state AG's offices by putting political pressure on them."

Nevada's cut of that deal amounts to $57 million, plus an additional $30 million that Cortez Masto negotiated in a separate settlement with Bank of America.

Unlike states that propose to use the money to plug budget gaps, Cortez Masto has committed Nevada's share to benefit distressed homeowners.

The centerpiece of her plan is a clearinghouse of sorts to link non-profit foreclosure prevention services that monitors the outcomes for their clients.

"There's no doubt from our perspective that as soon as we can get the money, that one stop-up to help homeowners, as soon as we get the money to legal aid to help individual homeowners and continue to help housing counselors who are assisting individuals, that's going to be a benefit," she said.

Cortez Masto said she has heard the calls to use the money to reduce the principal of underwater mortgages held by many homeowners.

"Here in Nevada our negative equity is somewhere between $15 billion and $25 billion, so that $87 million is not going to go very far," she said. "If we can figure out how to turn it into a program that's going to benefit some, then we should do that."

Cortez Masto has yet to release the financial specifics of her proposal, but she said she plans to have it up and running this fall.

She added that some of the money will go toward law enforcement efforts, in an effort to prosecute those responsible for the housing crisis.

Tonight on 8 News NOW: The attorney general's former criminal chief questions the future of those efforts.

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