At first glance, the $25 billion settlement between 49 state attorneys general and five big banks certainly sounds like a substantial sum of money. While the deal has been touted as being the largest of its kind since the 1998 multi-state agreement with the tobacco industry, the Washington Post noted on February 9, 2012, that deal was worth around $350 billion in today’s dollars—or 14 times the amount of this settlement with the mortgage lenders. Furthermore, this settlement with the banks is “also not a lot of money compared to the $700 billion in underwater mortgage debt, or the bailout of the banks that issue and bought the debt in the first place,” the Post said.
Maryland Attorney General Douglas Gansler told WTOP-FM in a story published on February 9, 2012, that Maryland will get $959 million and Washington DC will get $45 million as part of the settlement. In an editorial published on February 9, 2012, the Baltimore Sun called the settlement a “good deal for Maryland,” but also acknowledged that the deal “will not help borrowers whose loans are owned by Fannie Mae or Freddie Mac—about half of the market.” Other editorial boards were more skeptical, with the New York Times calling the settlement “a wrist slap compared with the economic damage wrought by the banks in the housing bubble and bust,” and the Chicago Tribune noting that the deal “picks winners and losers” and more than 90 percent of underwater homeowners “won’t be helped at all.”
The settlement could indeed help thousands of homeowners currently in need of foreclosure help, but could just as easily leave many thousands more out in the cold. Over the next couple of days, I will look at some of the details of this settlement and hopefully answer some of the more frequently asked questions about what the deal might mean for you.
While the $25 billion settlement will help some families, it is important to understand that you should not be waiting by your mailbox for a check to arrive. The process to disburse payments after the settlement could possibly take several months. If you believe you may be eligible for a check as part of this settlement and have also been considering filing for Chapter 7 or Chapter 13 bankruptcy, you should speak to a Maryland or Washington DC bankruptcy attorney to discuss your best course of action.
Law Firm of Kevin D. Judd – Washington DC bankruptcy lawyer