Fresh off his Daily Show appearance, HUD Secretary Shaun Donovan announced that Bank of America will provide additional assistance to homeowners under the as-yet undisclosed foreclosure fraud settlement. BofA will write down to market value, according to Donovan, over 200,000 loans that correspond to certain criteria: if the homeowners are underwater, delinquent by more than 60 days, and saddled with payments that are over a quarter of income, then they must be offered the mod. These are slightly better terms, we are told, than the rest of the settlement (other banks aren’t required to offer mods to everyone who fits the criteria, and they can write down to within 120% of loan-to-value, not market value).

Only thing is, the Hardest Hit Fund apparently has the same kind of miserable success rate as HAMP.

One thing that I’ve been pointing out is that the best estimate by HUD and other federal and state boosters of the foreclosure fraud settlement is that it will help 1 million underwater borrowers get principal reductions. That represents a little less than 10% of the total underwater borrowers in the country. The latest data on negative equity from CoreLogic shows 11.1 million borrowers underwater at the end of 2011, which represents a whopping 22.8% of all residential properties with a mortgage. By the way, that’s up from 10.7 million at the end of the third quarter of 2011.

So even under HUD’s own terms, the settlement won’t put much of a dent in negative equity. But what if HUD’s estimates are too high? What if only half as many borrowers as HUD claims will see relief?

The National Association of Consumer Advocates, the National Association of Consumer Bankruptcy Attorneys and the National Consumer Law Center have released the results of a survey showing that “mortgage servicers continue to initiate foreclosure proceedings improperly, either while a homeowner is awaiting a loan modification or due to improper fees or payment processing.” And it’s occurring even after the services signed an earlier settlement to end the practices.

The Administration continued to push back on one particular story from Shahien Nasiripour by devoting an entire blog post about whether bank servicers can count the incentives from HAMP modifications toward the “credits” in the foreclosure fraud settlement. But Shahien’s story didn’t make that claim (thought the title hinted), and we’re still without actual terms to see how it all works.

I didn’t think much of the HAMP changes announced last Friday, but my pessimism mainly came from the fact that HAMP itself is an irreparably damaged program that nobody wants to use. There’s also the point that the GSEs are generally uninterested in a principal reduction program, and servicers are conflicted. There’s little reason to hope these changes will help much.

We may be getting close to a settlement betweent some state AGs and the mortgage bankers on foreclosure and related mortgage practices. Late on Friday I spoke with Simon Johnson, the former chief economist of the IMF and a professor at MIT, who also writes the Baseline Scenario blog with James Kwak. Johnson has been skeptical of the foreclosure fraud settlement.

The 1% protects the 1%. That’s all we’re talking about here. The problem for the Administration is that millions of homeowners have paid the price for this protection racket, and there’s an election coming up. So the effort will be made to create a fig leaf of a “solution” to “fix” the housing market and benefit homeowners.

What hasn’t received enough attention is the extent to which we’ve already been down this road. In 2008, 12 AGs entered into a settlement with Bank of America over Countrywide lending practices. As part of the settlement, BofA agreed to modify as many as 400,000 mortgages, costing $8.4 billion, with a variety of types of mods, including principal reductions and refinancing. In addition, servicer practices were supposed to change and foreclosure operations on the affected homes suspended.

Shaun Donovan, the Secretary of Housing and Urban Development, made some news today at the US Conference of Mayors, by saying that a foreclosure fraud settlement was imminent and that it would include principal write-downs for up to one million borrowers.