About a dozen banks will start making billions in payments to homeowners next week as part of a settlement over shoddy foreclosure practices.
About 4.2 million borrowers are expected to receive about $3.6 billion — payments ranging from $300 to $125,000 — from 11 mortgage servicers starting April 12 as part of a January agreement reached by the Office of the Comptroller of the Currency and the Federal Reserve Board.
The agreement provides cash payments to borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo.
More than 90 percent of the total payments to borrowers at 11 of those servicers are expected to have been sent by the end of the month.
Checks will be sent in several waves beginning with 1.4 million checks April 12. The final batch is expected to go out in mid-July.
No information has been announced yet about payments from Goldman Sachs and Morgan Stanley but details are expected soon.
Several House Democrats, including House Financial Services ranking member Maxine Waters (Calif.), is pressing federal regulators to explain why they offered up the deal and chose to terminate the Independent Foreclosure Review (IFR), which was a more detailed program designed to examine millions of cases and determine what happened.
But regulators argued that the process was painstakingly slow and the money wouldn't get to homeowners at a reasonable pace.
Borrowers who accept payments will still be able to take action related to their foreclosure. Servicers are not allowed to ask borrowers to waive any legal claims they may have against their servicer in connection with accepting payment.
In determining the payment amounts, borrowers were categorized according to the stage of their foreclosure process and the type of possible servicer error.
While the agreement ended the IFR for the 13 companies in the agreement, the review continues for OneWest, Everbank and GMAC Mortgage.
Story by Vicki Needham
Read more: http://thehill.com/blogs/on-the-money/banking-financial-institutions/292661-mortgage-services-set-to-dole-out-cash-to-foreclosed-homeowners#ixzz2Q52iq4oD
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