Some local homeowners wrongly foreclosed on in 2009 and 2010 could receive checks in the mail.
In an amended federal settlement agreement reached this year — a second, separate settlement from 2012’s National Mortgage Settlement — 13 mortgage service firms are required to pay $9.3 billion to resolve faulty foreclosures.
The agreement replaced orders made in 2011 for mortgage servicers to do case-by-case reviews of foreclosures — which was known as the Independent Foreclosure Review. Instead, servicers must compensate borrowers directly they have already identified as being harmed, the Federal Reserve Board and Office of the Comptroller of the Currency said.
The deal involves these servicers: Aurora, Bank of America, Citi, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
On March 18 this year more than 4.2 million people nationally were sent postcard notices about payments they will receive from the agency hired to handle payments — Rust Consulting. For more information, call 1-888-952-9105.
“Over the next eight weeks, checks will be going to people who have had errors in their foreclosure process,” said Bill Grassano, a spokesman for the U.S. Office of the Comptroller of the Currency. “The amount that they will receive could be a few hundred dollars on up to several thousand, depending on the type of error.”
The postcard is not asking foreclosed borrowers to do anything, Grassano said.
“It’s to give them a heads up a check is coming and let them know to look for it,” he said.
A new report released Thursday by the U.S. Government Accountability Office found that the Independent Foreclosure Review process has been complex, regulator guidance was too broad, and there was limited monitoring for consistency in results to harmed borrowers. Those things impeded the ability of the bank regulators to meet the goals of the foreclosure review, which were to identify as many hurt borrowers as possible and compensate them, according to the U.S. GAO.
Delays in the process and lack of regular communication with borrowers has undermined transparency and public confidence in the foreclosure review, according to the report’s findings.
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