What impact did National Mortgage Settlement have on US housing?

>>> here with us now from chicago, housing and urban development secretary, shaun donovan. and cnbc's brian shactman also joins the table. good to have you both, brian , to have you back. so first of all, let's get a sense of the state of the housing market as it's going right now. there is some movement, right?

>> absolutely. just about all the things you care about in the housing market have done well over the past year. home sales, home prices up between 5% and 8% in different places around the country. housing construction has been leading the recovery. lots more construction jobs coming back on. and in some ways most importantly what got us into the crisis, the number of families fallen into foreclosure losing their homes is down to the lowest level since we've seen before the crisis began. so all of that is good, but there's more we can do to accelerate that. and that's why the president called for universal refinancing, for example, in the state of the union where the average family could save about $3,000 a year if congress can move a bipartisan bill on this.

>> front page of business section of "the new york times," "despite aid borrowers fill face foreclosure. despite the banner numbers released on thursday, thousands of homeowners are still not getting the help they need to save their homes from foreclosure." and it goes on and on to name some pretty large numbers of people who are desperate for help.

>> yeah, look. the good news here is that we've cut the number of families falling in foreclosure by half -- more than half. and you know, i was on the show a year ago announcing this historic mortgage servicing settlement that we reached 49 bipartisan attorneys genest year ago. yesterday we announced that we had reached $46 billion in help. we thought we might reach, like, $35 billion for the entire country for the whole settlement. this is just in the first nine months, over 550,000 people. and the good news there is for the first time we're really cutting people's -- the balance of their loans permanently. on average reducing them by over $80,000. so that is real progress . that's been part of what's moved us forward. but we can accelerate this. we can do more. and it's unfortunate about these discussions about sequestration is while we're focusing on this battle, we could be doing more. the president laid out plans in the state of the union to help the hardest-hit communities. we could excaccelerate and do more principal reduction. but we need to focus on those things and get those done this year.

>> mr. secretary, in terms of the foreclosure crisis and renegotiating mortgages for people, how much, if at all, of an impediment are fannie and freddie in this process?

>> well, look. there is no question that the president and i disagree with the position they've taken. we think that if you cut somebody's balance on their loan to a level that they can afford, not only is that good for the homeowner, it's good for the housing market and their neighborhood. it's actually good for the people who own the loan because what it's shown -- and we've proved this with what we released yesterday -- that folks stay in the homes. they keep paying. and you're actually more likely to recover if you're an investor in that loan. so we're going to keep making that argument and keep pushing for fannie and freddie to do that.

>> brian ?

>> two questions, really. "the new york times" really focuses on this relationship between the first mortgage and the second mortgage , and it basically comes out and says they're trying to funnel more money, the banks are, toward the second mortgage because it benefits themselves and they can still be in trouble with their first mortgage . i guess i'd want you to explain that a little bit. and do you see that happening? and the second one is do you still have this moral hazard issue where you're helping people, and to what degree do they also need to be accountable for some of their decisions, and how does that balance itself out?

>> well, first of all, on this issue of first and second mortgages, you know, it's funny. a year ago when i was on the program, the criticism was that these banks were going to cut the first mortgages that belonged to somebody else and not cut their own second mortgages. now some people are saying well, they're doing too much cutting of the second mortgage . look, here's the fact. those second mortgages are real debt for people that are struggling. we set rules that said, look. if this is a mortgage that's unlikely to be repaid, we're only going to give you 10 cents on the dollar credit for those mortgages. these banks aren't getting away with anything by cutting delinquent mortgages. and in fact, we have requirements that say, you only get credit for cutting these balances if you can show that that homeowner is still in the home 90 days later paying and making -- being able to make a go of it in that home. so i'm very comfortable that we're getting a good balance of second liens and first liens because, look. the truth is, when you look at who's under water, over half of what is putting people in america under water today is these second liens. so if we're not getting to that problem -- and that's directly on these banks' balance sheet , it's real pain to them to cut these second mortgages, if we're not dealing with that problem, we're putting our head in the sand.

>> with those second liens, isn't that where you get into some personal debt maybe and home equity lines? that's where it gets a little fuzzy , i guess, for us.

>> what we are looking at is only second liens on the homes. these aren't personal lines of credit or other things. and again, we have a strict requirement, and we've been monitoring this closely, that when you do these principal reductions, it has to help that family stay in the home.

>> right.

>> for at least 90 days to be able to get any credit for it. so we know that this is making a real difference in people's lives.

>> all right. secretary shaun donovan, thank you very much. and thank you, brian .

>> my pleasure to be with you.

>>> up next, a major winter storm is barrelling across the midwest right now, dropping near record amounts of snow in some parts of the country. bill karins has an update on the storm's path next