Servicers will likely avoid extending modifications as part of the $26 billion AG settlement since they will not be indemnified against investor lawsuits, according to a JPMorgan Securities report.

The AG Settlement includes $17 billion dedicated to principal reduction on both first and second liens mortgages that are owned and held by the nation‘s largest bank servicers. However, to extend principal forgiveness on securitizations, banks would need to infuse cash into the mortgage trust to cover the principal reduction.  

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