The Washington region raked in $1.5 billion in a landmark mortgage settlement with the nation's five largest banks on Thursday, as Maryland scored nearly $1 billion in what represented the sixth-largest haul nationwide for a state ravaged by home foreclosures.
In a deal announced by a group of state attorneys general, the banks will provide $25 billion to aid those in 49 states who lost their homes from deceptive foreclosure methods and to prop up homeowners facing mortgage payments that exceed the value of their homes.
| Top 10 paydays |
| State settlement amounts |
| 1. California: $16.5 billion |
| 2. Florida: $8.5 billion |
| 3. Arizona: $1.6 billion |
| 4. Nevada: $1.5 billion |
| 5. Illinois: $1.2 billion |
| 6. Maryland: $960 million |
| 7. New Jersey: $838 million |
| 8. Georgia: $815 million |
| 9. Michigan: $790 million |
| 10. New York: $741 million |
| Who's receiving settlement dollars? |
| Eligibility: About 750,000 borrowers who lost their homes through deceptive foreclosure practices between 2008 and 2011 -- and had mortgages serviced by one of the five banks involved -- could receive about $2,000 in cash payments. And so-called underwater homeowners could refinance at historically low rates if they followed all the rules. However, mortgages covered by Fannie Mae and Freddie Mac -- more than half of all mortgages -- aren't eligible for the program. |
| Timeline: It probably will take months before homeowners learn if they are eligible for funds reached in a mortgage-scam settlement with the nation's largest banks. In the next two months, government officials will choose an administrator to monitor the program, and it will take another six to nine months to notify homeowners. |
Virginia will receive about $480 million and the District is expecting roughly $45 million in an arrangement struck with Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial Inc. -- each criticized for fraudulent practices, such as robo-signing documents in which the signer had no knowledge of the legally binding information.
"The bad news is Maryland was disproportionately affected by foreclosures," said Maryland Attorney General Douglas Gansler. "The good news is we received the sixth most money from the settlement. The heartless, soulless acts of banks led directly to the foreclosure crisis."
Analysts say that the housing crisis was caused by a combination of deceptive practices by mortgage lenders and homeowners who bought properties well beyond their means.
For Maryland, more than $800 million will go to homeowner relief programs, $24.1 million for payments are slated for foreclosed homeowners who can prove they were victims of fraud -- in a one-time installment of about $2,000
-- and $64 million is expected to help refinance mortgages. Another $56 million will target Prince George's County and Baltimore City, the two areas hit hardest by foreclosures, for initiatives like housing counselor training and other programs to help those overwhelmed by housing debt.
"Virtually no one in Prince George's County was untouched in some way by the foreclosure crisis, whether they lost their own home or knew someone who's underwater," said Rep. Donna Edwards, D-Prince George's and Montgomery counties. "It does say that there is accountability, that we will make our communities whole again."
Some critics contend the deal did not go far enough, saying the billions in settlement funding represented just a small fraction of the damage wreaked on a housing market that hammered the U.S. economy, reminders of which are seen in shuttered houses and vacant neighborhoods still lining once-thriving communities. But the settlement does not excuse criminal liability for the five largest banks.
In total, nearly 1 million households nationwide will see reduced loans, according to the architects of the settlement. The money will be distributed to borrowers who were deceived by service providers and were foreclosed upon between 2008 and 2011.
However, the majority of mortgages -- which are owned by industry titans Fannie Mae and Freddie Mac -- are not covered by the deal. Oklahoma was the lone state to hold out of the arrangement, reaching a separate pact with the banks.
Staff Writer Ben Giles contributed to this report.
