The much touted agreement last week between major financial institutions and several states offers little relief to those who lost their homes due to questionable lending practices, and will actually hurt those who may have had legitimate reason to take the banks to court.
Maryland will receive about $960 million of the $25 billion settlement that 49 states agreed to with Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial.
The agreement will be beneficial to those who are able to get loan modifications or reduced interest rates and be able to stay in their homes, but for those who have already lost their homes the agreement does little to help.
Under the agreement, those who lost homes that were financed through those five lenders will be eligible for a $2,000 payment.
Mortgages or loans that are owned by Fannie Mae or Freddie Mac, which account for about 50 percent of all U.S. mortgages, aren't covered.
The agreement also protects the banks from lawsuits that may have resulted from questionable lending practices.
According to Maryland Attorney General Douglas Gansler, money from the settlement will be used for individual payments to borrowers who were victims of unfair servicing practices and were foreclosed upon between Jan. 1, 2008, and December 31, 2011.
In a statement, Gansler said, "This agreement will provide direct, imminent and significant relief at last to thousands of Maryland homeowners. It is a down payment and a first step toward lasting reform of the mortgage industry."
The agreement is good in that it will bring about reforms to the financial industry, and it will force banks to work with current customers to try and help them stay in their homes. But it fails when it limits those who have already been impacted through foreclosure to getting only $2,000 and keeps those whose lives were ruined by dishonest lending practices from getting anything more from the financial institutions.