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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
Kay
April 20, 2013 at 5:54 pm

Can my bank please clean all the ugly report sent to the credit bureau on my credit? so that I can be qualify to buy another property

Dotty
April 20, 2013 at 11:32 am

Defianatly NO on fixing our credit report. Read that on Independant Foreclosure Review. Other things I know... checks out every friday, no particular order. If we got a postcard, we will get a check.

dazeemae
April 20, 2013 at 10:34 am

This should be interesting...I tried for months to get B of A to modify my loan because they told me that I was eligible. Then they told me that I would have to wait because I was still current on my payments but if I were to fall behind they could step in and do a modification sooner. So I fell behind and then the third person told me that I was behind and that I would have to become current in order for the to help me at all. Then the fourth person told me to pay the amount owed and stay current or pack my stuff and vacate the property. This had been my home for 12 years and had never missed a payment until a life altering event occurred and the bank was of NO help what-so-ever. I am sure that I will get the least amount payout as possible and even if I did get the max it would never be enough to make the emotional suffering they caused go away.

Smitty
April 20, 2013 at 9:19 am

So does anyone know if they are correcting credit reports
like they stated they would? Or are they still going to use everyone's
bad credit to charge us higher interest rates to get all the money back?

Ray Westphal
April 19, 2013 at 10:04 pm

No check here yet but was told it would be the end of the month. so maybe next week.

Ray Westphal
April 19, 2013 at 9:56 pm

If you think you are a victom of "WRONGFUL FORECLOSURE" You really need to see if you have a case with Phillips and Garcia. They even called me on a Sunday to discuss matters. They are the best and you will see my statements on their website. The are the real deal I promise you!

rikishi
April 19, 2013 at 5:06 pm

My check was mailed out last week but still not received. Any others in the same boat?

John
April 19, 2013 at 4:08 pm

Just called and rust said they just put their hands in a buget of letters and type the information that goes with the checks and mail in the next batch. Could not tell me when next batch will go out. Mines was not in first batch.

Loren
April 19, 2013 at 1:13 pm

It will definately be interesting to see, I was foreclosed on and Litton was made aware we had rescended the contract on the home due to failure to disclose major damage to the home itself. I got lucky in some respects that it happened when it did. So technically it is a wrongful foreclousre but we will see if the regulators agree. Knowing my luck I will end up with a $300 check.

ajanta
April 19, 2013 at 11:53 am

@sandra garland you're not alone. my loan servicer was Novastar, then Saxon, then Morgan Stanley and since Morgan Stanley/Saxon was included later, along with goldman sacs/litton, they will announce "later" when payments will go out. so, i'll just be in limbo until then.