Attorney General Doug Gansler told lawmakers Monday that the ink was still drying on the state’s $1 billion mortgage settlement with the five major banks – Wells Fargo, GMAC, Bank of America, JP Morgan Chase, and Citibank.
“This is a timely briefing because the agreement was literally filed about an hour ago,” Gansler told the House Economic Matters Committee.
Gansler said the state gave up all rights to sue the big five banks for servicing and originating bad mortgage claims, but gained 42 pages of new bank standards for servicing loans in Maryland, like having an individual at the bank contact homeowners when they are in trouble with a home loan.
The state keeps the right to pursue criminal charges against the banks for loan fraud, Gansler said. He indicated the state was interested in going after lawyers involved in the robo-signings.
The state did not give up any rights to fair-housing claims or individual claims, Gansler said.
“The biggest thing we did not give up is securitization claims,” Gansler said. “The banks were packaging sub-prime loans they knew would never be satisfied, and sold them to corporate and individual investors. We will be able to go after those claims in the future.”
Gansler said Maryland was the sixth hardest-hit state in the country for foreclosures and consequently got the sixth-largest settlement, larger than New York’s.
Help is on the way
Help is us on the way to people underwater on their mortgages as well as Marylanders who have already lost their homes. Gansler said four pools of money would be available as soon as staffs were set up to distribute them.
The largest pool of money is around $810 million for those on the “brink of foreclosure.” The settlement requires that at least $485 million go to reducing principal and the rest can go to loan modification and short sales, Gansler said.
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