But no one involved with the settlement could say Monday exactly how the process will work.
About $3.3 billion would be direct payments to borrowers, regulators said. Another $5.2 billion would pay for other assistance including loan modifications. The agreement covers up to 3.8 million people nationally who were in foreclosure in 2009 and 2010. Most will receive from several hundred to several thousand dollars in compensation.
Fourteen mortgage servicers were ordered in April 2011 to offer the Independent Foreclosure Review, a free third-party case review, among other actions, as the result of an investigation into foreclosure abuses.
Approximately 144,700 Ohioans, including nearly 31,000 homeowners in Butler, Champaign, Clark, Greene, Hamilton, Miami, Montgomery, Preble and Warren counties, were eligible for the free review. Borrowers were asked to respond by filling out a form requesting their case be reviewed.
Monday’s deal involves 10 servicers: Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. That means meaning fewer people fall under the new agreement. Exact numbers were not available Monday.
Negotiations are ongoing with the other four servicers, government officials said.
Most of the affected borrowers in this part of the state reside in Montgomery and Hamilton counties, which were among the hardest hit in Ohio by foreclosures following the collapse of the real estate market.
Eligible borrowers could get $500 to $125,000 if their case shows mistakes or wrongdoing, according to information from government regulators. Wronged borrowers could receive a lump cash payment, as well as a correction to their credit report, payment for lost equity, reimbursements for related out-of-pocket costs and other remediation, according to government and consumer group officials.
The Federal Reserve said a payment agent will be appointed to administer payments on behalf of servicers. Questions about who the payment agent will be, how they will attempt to reach borrowers and how compensation will be issued could not be answered Monday.
“The concern seems to be that there’s a possibility that homeowners might have been entitled to ultimately more than what they will receive,” said Melodee Sheils, director of Consumer Credit Counseling Service of the Miami Valley, a local nonprofit finance and housing counseling agency.
The Independent Foreclosure Review had been criticized for not doing enough to reach borrowers. The deadline to submit a free request for a review was extended several times, most recently to Dec. 31. As of September, the response rate in Ohio was about 5 percent.
Nobody who submitted requests for review since 2011 received any remediation to date, according to government officials.
The eligibility requirements under Monday’s agreement is the same as it was with the previous review: homeowners must have been in the foreclosure process in 2009 or 2010 with one of the 10 participating mortgage servicers, but the foreclosure does not have to have been completed
Monday’s agreement “represents a significant change in direction” from the original 2011 agreements, Comptroller of the Currency Thomas Curry said in a statement. “It has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers,” Curry said.
Marcey Zwiebel, spokeswoman for PNC Financial Services Group, said, “We believe today’s agreement provides a benefit to eligible borrowers on a shorter timetable than the original review.”
This deal is separate from the record $25 billion National Mortgage Settlement reached almost a year ago under consumer protection laws.
The Associated Press contributed to this report.
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