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Foreclosure ‘review’ checks on the way

By Polyana da Costa · Bankrate.com
Tuesday, April 9, 2013
Posted: 5 pm ET

If your home was in the process of foreclosure in 2009 and 2010, you may be getting a check in the mail next week.

More than 4 million borrowers will receive payments ranging from $300 to $125,000, as a result of a settlement over improper foreclosure practices reached between regulators and mortgage servicers. The checks are scheduled to be mailed out starting Friday.

To benefit from this agreement, your loan must have been serviced by one the following companies, their affiliates or subsidiaries:

  • Aurora.
  • Bank of America.
  • Citibank.
  • Goldman Sachs.
  • HSBC.
  • JPMorgan Chase.
  • MetLife Bank.
  • Morgan Stanley.
  • PNC.
  • Sovereign.
  • SunTrust.
  • U.S. Bank.
  • Wells Fargo.

Borrowers will receive payments even if they were not victims of errors or misconduct by the servicers when their homes were in foreclosure.

Why does everyone get a piece of the pie?

Originally, regulators required servicers to hire third-party consultants to identify borrowers who suffered financial injury. They also offered borrowers a chance to have their foreclosure files reviewed for potential errors, so that the victims could receive compensation for the wrongdoing.

A year later and after more than $2 billion was paid to consultants reviewing the files, regulators decided that the process was too complicated. They put an end to the foreclosure reviews and reached an agreement with the mortgage servicers to provide $3.6 billion in cash payments to borrowers.

How do you get your share?

If your mortgage was serviced by one of the companies listed in the settlement, and you faced foreclosure in 2009 and 2010, you probably will receive a check sometime between next week and the end of July. About 1.4 million checks are expected to be sent by the end of April. The final wave of checks goes out by mid-July.

Goldman Sachs and Morgan Stanley are part of the agreement, but borrowers whose loans were serviced by them will not get paid yet. Information to these borrowers will be announced in the near future, the Federal Reserve says.

The checks will be sent by Rust Consulting Inc. If you want to confirm that you qualify for a payment or have moved and need to update your contact information, call (888) 952-9105. You will have to listen to a series of automated messages for about three or four minutes, but you'll get to talk to a representative after that.

How much will you get?

The payment amounts will be based on the stage of a borrower's foreclosure and the type of "possible servicer error" that regulators think you may have been a victim of.

How did regulators identify possible errors without reviewing the loan files? An OCC spokesman said that, rather than trying to identify potential errors, regulators used multiple automated systems to identify "objective" loan attributes such as:

  • The stage of foreclosure.
  • Whether a borrowers' loan modification was approved or denied.
  • Whether the borrower had requested a loan review.

The Federal Reserve and the OCC provided data with the payment details that resulted from this automated process. Here is a sample of the loans that qualified for compensation:

Loan mod was denied

According to the data, more than 300,000 borrowers lost their homes to foreclosure after loan modifications were denied. These borrowers will receive $3,000 each. Those who fall under this category and had previously requested a loan review will get $6,000.

Successful trial mod wasn't made permanent

Borrowers who got a loan modification and completed the payments required under the trial period but still lost their homes to foreclosure after the lender failed to convert the modification to permanent, will get $25,000 ($50,000 if they requested a review).

Borrower wasn't even in default

Some borrowers will get the maximum payment of $125,000. They include 53 homeowners whose homes were foreclosed on even though they were not in default.

Foreclosure hasn't been completed

If you've been through the inconvenience of having the lender try to foreclose on your home but the foreclosure is still in process, you (and about 600 other borrowers) will get about $5,000.

What do you think of this agreement?

I'd love to hear from borrowers who think they will be getting a check.

Follow me on Twitter @Polyanad.

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483 Comments
sandra garland
April 19, 2013 at 9:28 am

I have called and was told I was NOT in the first wave..Its bad enough I am not sure of WHAT we will get..but they cant even give me an idea WHEN mine will be mailed..Wells Fargo put us on a modification..we made the payments then were denied to continue..then we were denied any other modifications..but we were constantly told they would not forclose we would work it out..It wasnt worked out and we WERE forclosed on..so where is THAT on your list??I am frustrated..Someone should know SOMETHING!

sandra garland
April 19, 2013 at 9:26 am

I have called and wastold I wasNOT in the first wave..Its bad enough I am not sure of WHAT we will get..but they cant even givemeanidea WHEN mine will be mailed..Wells Fargo put us on amodification..we made thepayments then were denied to continue..then we were denied any other modifications..but we wereconstantly told they would not forclose we would workit out..It wasnt worked out and we WERE forclosed on..so where is THAT on your list??I am frustrated..Someone should know SOMETHING!

John
April 19, 2013 at 1:20 am

Everyone keeps venting but know one will admit who the rel crooks are.

Dillworth
April 18, 2013 at 11:36 pm

If you got a postcard your getting payment. If not, no.

robin
April 18, 2013 at 11:14 pm

Can someone tell me, how can the United States Of America have the heart to go to another country and tell them how to run their country and they can't even run or treat people here with respect! Chairity begin's at home!

robin
April 18, 2013 at 10:28 pm

You are right Bob! Everybody but the people they set up! Us!

Bob
April 18, 2013 at 9:22 pm

We were almost foreclosed on but got a mod. Citi mtg is really hard to deal with. We have to pay a check by phone every month and it cost us 15.00 eaxh time. We pay by phone because two or three times we mailed it and it got lost or they posted to the wrong acct. Now my wife and i have 30-60-90 day lates on our credit report citi mtg refuses to correct it although it was there fault. Our foreclosure stuff was happening in 2008-2009 so im not sure if we will get one of the checks or not. I am most certain someone is making some money off of this ordeal meanig the people taking care of this situation ...

j
April 18, 2013 at 8:36 pm

any better news

Anais
April 18, 2013 at 8:28 pm

My Husband and I got $500. We were denied a loan mod, a short sale offer on our home, which was for $5,000-$10,000 less than we owed and our home is still in foreclosure and has been since 2008. We definitely didn't get what we were supposed to.

lv119
April 18, 2013 at 6:13 pm

I just spoke to Rust Consulting today and they said that 90% of the borrowers should received their check by the end of April 2013. The checks go out in batches-- no particular order, not alphabetical order either.