Neal Augenstein, wtop.com
WASHINGTON – Maryland, Virginia, and the District of Columbia will receive more than a billion dollars in the settlement between U.S. states and the five banks targeted for deceptive mortgage lending practices.
Maryland Attorney General Douglas Gansler tells WTOP Maryland will get $959 million, Virginia $479 million and D.C. $45 million as part of the settlement announced Thursday.
“The behavior of the soulless, heartless national banks directly and significantly contributed to the housing foreclosure crisis in America, and the economic recession that followed,” Gansler said.
The five banks involved in the settlement are Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial Inc.
People who have lost their homes to foreclosures will receive a one-time payment of $1,800 to $2,000, according to Gansler.
Another pool of money will come to people underwater on their mortgages.
“They will be able to refinance their homes at the value of their home now, and thereby pay a dramatically lower interest rates in future payments,” said Gansler.
Gansler said the bulk of the money will go to homeowners on the threshhold of foreclosure, in the form of principal reductions and other remedies.
Gansler, the president-elect of the National Association of Attorneys General, said the settlement grants immunity from civil lawsuits brought by the attorneys general, but does not preclude future criminal and civil problems for the banks.
“We are not waiving any criminal liability, any liability including the securitization of these loans — that is the packaging of these subprime loans and then selling them to investors — or any individual claims a homeowner may have,” Gansler said.
“If a particular homeowner can show the reason they were foreclosed-upon was a direct result of the fraud of a bank, they can seek full restitution from the bank,” Gansler said.
Maryland’s payment is the sixth-highest in the nation.
“The bad news is Maryland had a disproportionate amount of foreclosures — one third of which were in Prince George’s County. The good news is we get a disproportionate amount of the money,” Gansler said.
The process should be fairly painless for affected homeowners, Gansler said.
“The banks know who’s eligible. They have the records. So the banks themselves will contact the individual (homeowners),” Gansler says.
Gansler said he hopes public awareness of the settlement will ensure homeowners get what they’re entitled to.
“These are individuals who’ve been running away from bank phone calls and bank letters for years, so we’re going to try to follow it up with a call from the Office of Attorney General saying, ‘You need to get in touch with this bank. You are eligible for this loan modification, this principal reduction, you need to get on this,'” Gansler said.
Gansler said there is a three-year time limit on the settlement.
“Unlike the tobacco settlement, the banks have a strong economic incentive to get out all the money within the first year or they’re penalized,” Gansler said.
“That’s why they’ll give us the information to get to these people, because it’s in (the banks’) interests as well to get the money out right away.”
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