Maine eyes $21 million in multistate suit against mortgage lenders

AUGUSTA — Maine is in line to receive $21 million from a multistate settlement against the nation's largest mortgage lenders over wrongful foreclosures and fraud. 

Attorney General William J. Schneider announced Thursday the state had joined a $25 billion federal-state agreement. A consortium of 49 state attorneys general joined U.S. Attorney General Eric Holder and U.S. Housing and Urban Development Secretary Shaun Donovan in announcing the national settlement Thursday in Washington, D.C.

Only Oklahoma did not join the lawsuit against the nation's five largest banks: Bank of America, Citigroup, JPMorgan Chase, Ally Financial and Wells Fargo. 

The deal is one of the largest since the 1998 settlement with the tobacco industry. The agreement finalizes negotiations designed to hold banks accountable for falsifying documents related to home foreclosures in several states.

The agreement cuts mortgage debt for about 1 million homeowners. Another 300,000 will have their loans refinanced at lower interest rates. About 750,000 who were foreclosed on would each be compensated $2,000.

"This agreement lays out the best first step to get relief directly to eligible Maine borrowers who were harmed,” said Maine's Schneider in a statement. "The statewide impact of these prohibited foreclosure practices will be offset through funding for foreclosure-prevention programs, legal assistance to homeowners in foreclosure and compensation to the state’s General Fund."

According to the Attorney General's Office, Maine borrowers who are in default on their mortgages will receive an estimated $7 million in direct borrower relief through principal reduction, short sales and borrower transition efforts.

Mainers who lost their homes to foreclosure from Jan. 1, 2008, through Dec. 31, 2011, will qualify for cash payments from a $1.9 million fund.

The state will receive a direct payment of $8.2 million for foreclosure-prevention programs, legal assistance to homeowners and the General Fund, according to the AG.

Nationally, loan servicers will commit a minimum of $17 billion directly to borrowers through a series of homeowner-relief-effort options. According to the U.S. Attorney General's Office, the structure of the settlement will yield an estimated $32 billion in direct homeowner relief.

In addition to monetary payout, the settlement means homeowners will receive comprehensive new protections from loan servicing and foreclosure standards. An independent monitor will ensure mortgage servicer compliance.

Going forward, the government will be able to pursue civil claims outside the agreement. Borrowers and investors can also pursue individual, institutional or class-action cases.

State attorneys general and federal agencies will continue to investigate and pursue other aspects of the mortgage crisis, including securities cases.

 smistler@sunjournal.com

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Comments

ERNEST LABBE's picture

Excuse me

Excuse me the people that lost their homes get $2,000.00. The State gets 8 million for the general fund. How is this right.

CLAIRE GAMACHE's picture

Something new under the sun

I know it is an election year and this is too well timed to be a coincidence but you have to admit you never, ever would see something like this coming from a Republican administration. I also take it as a sign the economy is in better shape than most people admit. I doubt the banks would have agreed to this unless they could easily afford it.

Kim Waite's picture

As usual, Americans have no idea how our nation got in this mess

First off, after 9/11 the state of the economy went down because the Bush Regime had everyone scared out of their wits that al-Qaeda was living in their basements.

Secondly, George Bush in 2002 created the "American Dream Downpayment Act" (Google it!) and said to the nation that we are an "ownership society". From that moment, THE BANKS TOOK ALL THE RISKS, because people were allowed to get a loan without a down payment (thanks to the Free Downpayment Act ole Georgie created!), without a credit check, and without verfiying one's income.

And it wasn't only the poor who got a loan from a bank that they couldn't afford. The middle class went ballistic buying up homes. Some were buying more than one home to flip them to make a profit! And there were some out there across the nation who REMORTGAGED their home to buy a Hummer or to update their kitchen or what have you.

The Big Banks were fine with no one paying thier mortgage, because the banks took those toxic loans and "insured" them through AIG. AIG then turned part of their comp. into a hedgefund and sold those loans offshore into more hedgefunds! A $100,000 mortgage on land that was defaulted on became $1,000,000 in value offshore in the Wall Street Housing Casino!

So, in conclusion, between Bush's laws and the banks taking all the risk, neither one of them cared if you paid your mortgage or not. They gave out loans to anyone who wanted one. And guess how much the derivatives/credit default swap bubble is worth today? $1.5 QUADRILLION.

Kim Waite's picture

And by the way...

....the credit unions of America saw the scheme the Big Banks were creating and they did not join in! The credit unions and small local banks were the only financial institutions that remain sound to this day. Wall Street and the Big Banks created this mess along with the US Congress to show the world "how strong America is" even after an event such as 9/11 happening to us!

I was in the housing market from 2005 to 2007. I walked into a Wells Fargo office with some homes that I was interested in buying. One was an apartment building. The two women behind the desk I met with had eyes the big as saucers (their greed was seeping out!) looking at that one and said to me, "We can also give you a $120,000 construction loan in addition to buying the building!". What should have been a $125,000 mortgage had suddenly doubled before my eyes. I walked out of the office disgusted. Why? Because I couldn't afford it and because it was very apparent to me that they didn't care.

Anyway, stop blaming poor people for the Housing Bubble, when it was the banks who took all the risk!

Robert Cook's picture

Mortgage crisis

This is a total scam. Who forced lenders to make loans that they wouldn’t otherwise make to poor and minorities? The Federal Government! It was first done under the threat of ‘redlining’. When the banks objected that this was a poor business practice the bank regulators told the bank to give out the loans anyway and the government would guarantee the loan if it failed. The banks not wanting to have a large portfolio of these risky loans then bundled them and sold them as securities to investors Fannie & Freddie with the knowledge that the Government would back them. When the housing market collapsed Fannie & Freddie holding all these loans asked to be bailed out. So now Obama and his henchmen say the banks that made the loans are at fault? I can see it now, Obama’s re-election mantra will be those big bad banks conned all these poor minorities into taking a loan they couldn’t afford. Those big bad banks should be taught a lesson! This is nothing but fodder for his re-election!

Kim Waite's picture

George Bush in September 2008

when the stock market started crashing is the one who bailed the banks out by creating TARP in October 2008. During that fateful week of September 2008, a half a TRILLION dollars was taken out of the money markets (offshore? Must have been because to this day no one has been arrested for the electronic run on the banks that day!) in 90 minutes. The Federal Reserve pushed $180 BILLION dollars onto the market to stave off a total collapse. It worked temporarily, but then Bush said it was time to bail the banks out. He created a $753 BILLION dollar TARP (protects ya from the bad weather!) bailout and before he left office, he took $353 billion and gave it out to the Big Banks without strings attached. The Big Banks went wild with their new found money! In fact, after Obama won in November 2008, the Big Banks were on a high again and when Obama in early 2009 after being sworn in started adding strings to the bailout money, that's when the republicans of the nation started calling him a big meaning to the banks.

Guess how much Bush's TARP has cost Americans so far? $7 TRILLION DOLLARS. Had George Bush decided to give every single American who filed a tax return in 2007 a $50,000 check, our nation would have flourished and he would have been a hero leaving his presidency, but he didn't do that. Sad.

Jack Jalbert's picture

"Dead on" Robert

I'm so glad the first post was from someone who pays attention. Financially sound banks, which did nothing wrong, were forced to take the money too even though they didn't need it. That way the Obama Administration would later be able to say that they had to do this to avert a crisis. After all, look how many banks got that taxpayer funded bank bailout money. A person would have to be blind not to see that well timed lie coming.

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