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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
Jackie
April 23, 2013 at 5:17 pm

@Kathy - There are 2 different settlements. The IFR is mailing out payments every Friday until May. 90% of the 4.2 million people should have their checks by then. The other are required to provide additional information before they get their checks. Each person will receive between $330-125,000. You can go to the OCC website, they have a break down of payment 'categories', and you can check and see what payment amount you might qualify for. The other settlement is called the National Mortgage Settlement. It is a blanket settlement, each person gets the same amount. The original statement that was released said each person would get a minimum of $840. They updated the web site and now say each person will receive more than the $840, but they don't specify how much more. The web site says payments will be sent mid-year 2013. Hope this helps.

Rufred
April 23, 2013 at 4:47 pm

@DJ I called Rust to ask what 'wave' we were in and the representative did not know what I was talking about. He stated I had to contact the servicer. I thought these people worked for the servicer...hmmmmm! He also stated we could go to IFR webpage and find the information...not seeing it. Any suggestions?

Manuela Carmona
April 23, 2013 at 4:09 pm

Since Goldman Sachs was using LittonLoan then sold their serciving to Ocwen. It's seems to me it's all a mess, what happened to my original foreclosure docs? I called RUST was told Goldman still hasn't wrapped up their process.. Hmm I better not hold my breath ..

Alice Crowder
April 23, 2013 at 3:32 pm

Iwant them to call me and hear what I went through for almost 2 years and my payment is the same

Kathy
April 23, 2013 at 2:33 pm

Over a month ago I had spoken to a customer rep., from the Independment Foreclosure Review he had said they had reached an agreement at the begining of Jan., and checks would be mailed out by the end of March, now after reading this it's going to take to mid July. I'm very confused how they are coming to a conculsion what happens if you fall into more then one category. Also the rep said Rust Consulting will be contacting those who will be getting a check should we contact Rust Consulting...How does everyone feel about whats going on

Rufred
April 23, 2013 at 1:18 pm

Love reading all the comments...exactly how we feel and what happened to us. MY thought is they probably put our names in a lottery and pulled names for the different payment amounts; seems something they would do. I can bet the ones with the large checks also have a deficiency judgement against them so the banks will make sure to get the BIG $$ back in their pockets. What a joke!! The National Mortgae webpage (the second pay out for foreclosure) has posted recent information. They have also contracted RUST Consult to dispurse checks in '4-6 weeks'. So expect them in 10+ weeks or whenever they feel like getting them out.

Frank
April 23, 2013 at 12:02 pm

Thank you for the help! I will call them and ask what wave I am in then, if I don't receive a check today in the mail! Thanks again for the help.

DJ
April 23, 2013 at 10:49 am

@Frank. they are mailing every Friday ...ask them what wave u r in

Frank
April 23, 2013 at 9:53 am

I know I will be receiving a check, however I still haven't received it. Does anyone know how this process works? Are they continually printing checks and mailing them, or is there a set date when they will begin to mail another batch. I have called numerous times and cannot get any concrete information. I did confirm that they have the correct mailing address on file.

John
April 22, 2013 at 10:52 pm

Those suck bag white thieves sent me 500 and I know I was due at least 6000 k or more scumbags