The federal government recently reached an agreement to provide as much as $25 billion to 49 states and the District to assist borrowers in those jurisdictions who either lost their homes to foreclosure or whose homes are underwater.

Some funds have been given directly to the states that have signed on to the agreement to help pay for consumer and foreclosure protection efforts.

The settlement came about after the various state attorneys general filed suit against the lenders, claiming, among many other things, that the defendants routinely signed foreclosure related documents that were not properly notarized and without actually knowing whether the facts contained in those documents were correct. According to the plaintiffs, this practice — which came to be known as “robo-signing” — was illegal. Oklahoma was the only state that refused to be a party to the agreement.

The five lenders putting up the $25 billion are Ally Bank (formerly GMAC), Bank of America (successor to Countrywide), Citi, J.P. Morgan Chase and Wells Fargo.

The District is projected to get about $40 million. However, the actual amount will depend on how many homeowners opt to participate in the principal reduction and refinancing programs. If your home was foreclosed upon between 2008 and 2011, you may qualify for cash payments.

Moreover, the D.C. government will receive a $4.6 million payment. The city will use the money for mortgage- and foreclosure-related counseling, legal assistance or advocacy, mediation and outreach assistance to help current and former homeowners secure the benefits they are eligible to receive under the settlement, said Bennett Rushkoff, chief of D.C. consumer protection.

Maryland is slated to receive almost $1 billion, about $60 million of which will go directly to the state. Attorney General Douglas F. Gansler said 10 percent of the money will go into the general fund, and the remaining $53 million will be used to help homeowners and other victims of the mortgage crises. “For example, it may well be that high on the list is the need for more nonprofit housing counselors who can help distressed homeowners with this settlement and those homeowners who may not be eligible for these benefits but could save their homes another way,” Gansler said.

It must be emphasized that the settlement did not stop foreclosures. In fact, in January “foreclosure activity surged in about half of the states, ”according to RealtyTrac, an organization that keeps statistics on foreclosures across the country. Why? Because banks had imposed their own moratorium on foreclosures based on the various abuses raised in the settlement agreement and have now started to address the backlog.

Maryland had a 157 percent increase in foreclosures last year over the previous year. And according to Daren Blomquist, vice president at RealtyTrac, “At the end of the day in 2012, we are going to see an increase in foreclosures nationally from 2011.”

Virginia will get almost $480 million, $69 million of which will go directly to the state. The balance of the settlement proceeds will be used to provide financial assistance to those whose homes have been foreclosed upon or are underwater and need loan modifications.

Controversy has already emerged regarding the funds that go directly to the commonwealth. Virginia’s money will go to the General Assembly and not the attorney general, leading some to question whether it might be used to fill a budget hole. Attorney General Ken Cuccinelli II issued a statement defending the arrangement: “I believe strongly in the separation of powers, and the Constitution of Virginia provides that the General Assembly, not the attorney general, appropriates the commonwealth’s funds. Therefore, I have chosen to turn that money over to the General Assembly to decide how to spend it.”

If your home was foreclosed upon between 2008 and 2011, or if you are underwater with one of the five lenders involved in the settlement, what should you do? Although the lenders are required to contact you, to be on the safe side you should contact the company where you make (or made) your mortgage payment. Obtain more information about specific loan modifications and whether you will qualify under the terms and conditions of the settlement.

It is important to know, however, that the lenders were not released from criminal prosecutions. Nor does the agreement preclude homeowners or investors from pursuing individual, institutional or even class actions against the five lenders for any other mortgage-related misconduct.

If you believe you may be eligible for relief, you should also contact your state attorney general (or the Department of Insurance, Securities and Banking in the District). For more information about the settlement, go to these Web sites:, (click on “Mortgage Servicing Settlement Agreement” under Hot Topics), and

Benny L. Kass is a Washington lawyer. This column is not legal advice and should not be acted upon without obtaining legal counsel. For a free copy of the booklet “A Guide to Settlement on Your New Home,” send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036.

How to contact your lender:

Ally Bank (formerly GMAC): 800-766-4622

Bank of America: 877-488-7814

Citi: 866-272-4749

J.P. Morgan Chase: 866-372-6901

Wells Fargo: 800-288-3212