Monday, May 6, 2013
Foreclosure Settlement Checks
The compensation payment checks, which range from $300 up to $125,000, are part of the Independent Foreclosure Review Payment Agreement announced in January between federal regulators and 13 mortgage servicing companies, which were subject to enforcement actions for “deficient practices in mortgage loan servicing and foreclosure processing.” Deficient practices have included errors and misrepresentations and the “robo-signing” of documents.
The regulators are the U.S. Treasury’s Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System.
The recipients of the checks are mortgage loan borrowers whose homes were in any stage of a foreclosure process during 2009 or 2010, and whose mortgage servicers were among the 13 companies, or their subsidiaries or affiliates. Compensation payment checks, which began going out April 12, have so far been sent to 3.7 million homeowners. In all, 4.2 million eligible mortgage loan borrowers will receive them.
The 13 servicers are: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
According to the OCC’s online FAQ about the agreement, the servicers agreed “to provide more than $9.3 billion in cash payments and other assistance to help borrowers. The sum includes $3.6 billion in direct cash payments to eligible borrowers and $5.7 billion in other foreclosure prevention assistance, such as loan modifications and forgiveness of deficiency judgments.”
By comparison, the five largest banks alone – Wells Fargo, Citigroup, Goldman Sachs, JPMorganChase, Bank of America – earned $60 billion in total profits last year.
The largest payouts – $125,000 – are going to 1,082 members of the military wrongly foreclosed upon, and to just 53 homeowners across the country foreclosed upon even though they never missed a mortgage payment. But most of the recipients – almost 2 million homeowners – will get the smallest payments of $300 to $600.
“In determining the payment amounts,” reads a recent OCC press release, “borrowers were categorized according to the stage of their foreclosure process and the type of possible servicer error. Regulators then determined amounts for each category, using the financial remediation matrix published in June 2012 as a guide, incorporating input from various consumer groups.”)
So far federal regulators have refused to release information – about what the consultants’ reviews had found about mortgage servicers’ “deficient” practices in mortgage loan servicing and foreclosure processing – to the public, or even to Congress -- claiming the servicers’ documents are "trade secrets."