Maryland Attorney General Doug Gansler said the Old Line State was the sixth hardest-hit state in the country for foreclosures and consequently got the sixth-largest settlement as part of the $25 billion overall settlement reached between the state attorneys general and the nation’s biggest mortgage lenders. On March 13, 2012, the Maryland Reporter published a story indicating how Gansler intends to distribute the state’s $1 billion settlement with the five major banks.
According to the Reporter, Gansler said four pools of money would be available as soon as staffs were set up to distribute them. The largest amount, around $810 million, will be for those on the “brink of foreclosure.” Gansler said that the settlement requires that at least $485 million go to reducing principal and the rest can go to loan modification and short sales, and formulas will be established to determine who is likely to go into foreclosure in the near future.
Gansler said that another $64 million would be designated for “dramatically” reducing the monthly payments of people who are currently underwater. That pool will go to homeowners who are current on their loans but have been unable to refinance at lower interest rates.
Another $59 million established under the settlement will be made available for housing projects while the final pool of money will provide $1,800 to $2,000 to Marylanders who have already lost their homes to foreclosure. While Gansler said, “That doesn’t sound like a lot of money for someone who’s been foreclosed on,” he also noted that homeowners can still pursue litigation against the banks for fraud, according to the Reporter.
The news could give hope to a number of Maryland homeowners currently needing foreclosure help, but many people simply cannot afford to wait for the necessary staffs to be set up to disburse these funds. People searching for the best way to stop a foreclosure right now and possibly even keep their homes need to understand how filing Chapter 7 or Chapter 13 bankruptcy may deliver that help. On Friday, I will discuss how either filing may be able to help homeowners facing foreclosure.