Even as the $26 bil­lion mort­gage set­tle­ment helps hun­dreds of thou­sands of trou­bled home­own­ers, it will bring a wave of new fore­clo­sures. Many lenders held off on re­pos­sess­ing homes dur­ing the com­plex ne­go­ti­a­tions be­tween 49 state at­tor­neys gen­er­al, and fed­er­al of­fi­cials. That's left a back­log of trou­bled loans, many of which won't be helped by mea­sures in the deal that will let home­own­ers re­fi­nance or re­duce the amount of their mort­gage. "The bot­tom line is that 2012 will see a lot of fore­clo­sures that should have tak­en place in 2011 and didn't," said Rick Shar­ga, ex­ec­u­tive vice pres­i­dent for Car­ring­ton Hold­ings, a re­al es­tate fi­nance firm. Daren Blomquist, vice pres­i­dent of Re­al­ty­Trac, on­line mar­keter of fore­closed prop­er­ties, agrees that much of last year's 34 per cent drop in fore­clo­sure fil­ings was like­ly due to the un­cer­tain­ty in­volved in the ne­go­ti­a­tions. He es­ti­mates that new fil­ings will climb from 1.9 mil­lion in 2011 to be­tween 2.2 mil­lion and 2.5 mil­lion this year. "We think what we saw in 2011 was ar­ti­fi­cial­ly low fore­clo­sure num­bers," he said. He added that banks took longer to file fore­clo­sure no­tices last year, and longer to fin­ish the fore­clo­sure process.

HUD press sec­re­tary Der­rick Plum­mer said Thurs­day's mort­gage set­tle­ment was de­signed to make fore­clo­sure the last re­sort for banks ne­go­ti­at­ing with home­own­ers who are se­ri­ous­ly delin­quent on loans. Shar­ga and Blomquist said that the mort­gage deal will help many home­own­ers stay in their homes who would have oth­er­wise been forced out. Up to one mil­lion mort­gage hold­ers could see the mon­ey they owe re­duced. But the so­lu­tions of­fered by the set­tle­ment can on­ly work for home­own­ers who can af­ford to make new, low­er mort­gage pay­ments. Banks will have lit­tle choice to fore­close on those who have stopped pay­ing due to pro­longed un­em­ploy­ment or oth­er se­vere eco­nom­ic dis­tress. "The set­tle­ment re­al­ly wasn't de­signed to pre­vent fore­clo­sure on loans that aren't sal­vage­able," said Shar­ga. The five lenders who are par­ties to the deal-Bank of Amer­i­ca (BAC, For­tune 500), Cit­i­group (C, For­tune 500), JP­Mor­gan Chase (JPM, For­tune 500), Wells Far­go (WFC, For­tune 500) and Al­ly Fi­nan­cial to­geth­er ac­count for about 60 per cent of the mort­gage mar­ket, Shar­ga said.