Deal Sought To Reduce Mortgage Principal

New York, NY, Feb. 24, 2011 -- The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force the country's largest banks to pay for reductions in loan principal worth billions of dollars, according to the Wall Street Journal.

The Journal reports that if a unified settlement can be reached, banks could have to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers.

However, the Journal details the challenges of forging such a settlement.