Federal and state officials yesterday announced a $25 billion deal reached with five of the nation's largest mortgage lenders over foreclosure abuses. Maine is expected to receive $21 million under the settlement.
The settlement is the result of a massive investigation that included state attorneys general and banking regulators as well as nearly a dozen federal agencies, according to a press release from the Maine Attorney General's office. Under the agreement, Ally/GMAC, Bank of America, Citi, JPMorgan, Chase and Wells Fargo will pay out $25 billion in homeowner relief efforts, including reducing principals for 1 million households, and refinancing programs for borrowers who owe more than their home is worth. According to The Associated Press, 750,000 American who were improperly foreclosed upon will receive checks of $2,000. All states but Oklahoma were involved in the case and will receive money.
Maine borrowers in default will receive $7 million in relief through principal reduction, short sales and other efforts. Another $1.9 million will go to borrowers who lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2011. The value of refinanced loans to underwater borrowers in Maine will be an estimated $4.5 million, and another $82 million will go to the state's general fund for foreclosure prevention programs and legal assistance for homeowners, according to the release.
Portland lawyer Thomas Cox is largely responsible for setting off the national uproar over the mishandling of foreclosure cases. While investigating the foreclosure of a Maine woman, Cox deposed a GMAC Mortgage Co. employee who admitted to signing hundreds of foreclosure documents a day without reading them. Read more about Cox here.