Maryland Attorney General Doug Gansler said victims of the foreclosure crisis in Maryland will be getting some relief as the state has recovered up to $959 million in funds as a result of an investigation into fraudulent practices by national banks.
According to Gansler, roughly $62.5 million will be used for housing-related projects through the attorney general’s office, about $64 million will go to people whose current home values are significantly less than the amount they owe on their loans, close to $24.1 million will be broken up into sums of $1,800-2,000 to go to people no longer in their homes, and most of the remaining $808 million will go to principle reduction on homes.
“It’s a very important step in trying to bring needed relief to homeowners who are struggling, especially homeowners whose mortgages are worth more than their homes,” said Matt Fader, assistant attorney general. “This is an attempt to enable them to reach sustainable payments and help them stay in their homes.”?
The suit was brought as a result of national banks using robo-signing procedures on affidavits to illegally foreclose on homeowners across the country. As a result of that, attorney generals of all 50 states opened an investigation into the banks and found that the practice was widespread.
The attorney generals and banks negotiated, as part of the deal, what states would get as part of the settlement and what the states wouldn’t pursue. In exchange for the $959 million, Maryland and the federal government had to waive claims about the origination and servicing of loans.
However, claims can still be filed against the securitization of loans, where the subprime loans were packaged together and sold to investors. Fair lending laws and criminal liability are still in play as well. Gansler also said this doesn’t waive homeowner’s individual rights and they can still bring claims if they can show that the fraud of the banks contributed to losing their homes.
Chief Judge Royce D. Lamberth of the federal district court of the District of Columbia will oversee the banks’ compliance in distributing the funds. An independent monitor will also report to the attorney general and the court to help ensure that banks are identifying people eligible for the funding.
