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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
Angel
April 26, 2013 at 7:04 pm

had my home applied for loan mod..they said they could not get to me because they were so backed up...2 months later I called back they said they were still backed up but had my paper work however no one has even looked at it. I told them they were about to foreclose on me but we had more than enough income coming in now to do the loan mod just needed to be approved so we could get back on track. They foreclosed...I called they said stay in the house it usually takes a year before you kicked out and they will get to your paper work by then!! I got a letter the next day saying my family had 10 days to move out!! Just got a check for 300 bucks!!! I was never approved or denied the loan mod and would have been approved because we could make the payments...just feel behind due to me losing my job! Could not catch up...just needed to take back pay and extend the end of it...all I got was a letter telling me to leave the house that had 65k of equity in it!! 300 bucks in NOTHING compared to the home my husband and I built together when he returned home from the war!!!!!

ajanta
April 26, 2013 at 12:40 pm

@Sylvia Mermea, I never received paperwork to file with the National Mortgage Settlement either, and my servicer had the correct address, still waiting on the IFR check also, and Rust said it was mailed last Friday the 19th. I'm signing every petition I can find on line about the IFR.

Sylvia Mermea
April 26, 2013 at 12:03 pm

Just spoke by phone to a Rust Consultant re: The National Mortgage Settlement claims. Unfortunately, I missed the deadline to file. According to the rep, Citi sent an address to Rust Consultants to send me information to me for filing claims but it was not a good address so I never received the information to file. How convenient of Citi to give incorrect information. So, now I can't take advantage of the settlement! Another disappointment. I still have not received a check from the IFR.

Rufred
April 26, 2013 at 8:41 am

@Sharron..would love to check that proposal out. What is the best web page to view. I tried to locate and see only older proposals, not this one. Thx!

sharron
April 26, 2013 at 3:24 am

Great news, HR Bill 1706 bill just proposed and would greatly help us concerning this review, read it online!

sharron
April 26, 2013 at 2:15 am

I personally think that the banks should be prosecuted criminally. Taking homes away from people who have had them for generations, displacing and splitting families, driving people to nervous breakdowns and even death. They do the deceptive bad loans, don't work with most people to modify the loans, get bail outs, tax breaks, and I hear even insurance to cover the cost of the loans (no wonder they did not want to modify) then turn around and sell it too r rent it. When we lost ours, I put a note in the kitchen. It said, "whoever ends up with this house, please know our life savings was robbed from us and our future dreams, by losing this humble NOT at all overpriced home we intended to live forever in, and our hearts are truly broken".

j
April 25, 2013 at 8:34 pm

i know the bank wont make an error on our checks like our homes and lifes...

sharron
April 25, 2013 at 5:31 pm

@Rufred, yes, thot the same thing. I believe they are playing games and trying to pocket it somewhere else. I think they should be accountable for every dime. NOT saying who gets what is NOT for our "privacy" that is bull, it is for their pocket linings I believe. Kind of like someone getting a probate inheritance and not sharing with any known living relatives because they accidentLly on purpose don't know how to get ahold of them and or split it up. There seems to be zero level of trying to do the right thing for homeowners.

Rufred
April 25, 2013 at 9:37 am

@Sharron....I totally agree with your comments. One additional thought...if there is monies left over at the end, which we know there will be because of the 'BIG' pay outs, what happens to the left over $$? I can bet there is a 'hidden' agreement Built in for both sides. This way they show they, banks and government, have made an 'attempt' to make things right with us. As they say...the rich and powerful will always be the Phoenix.

angie
April 25, 2013 at 7:56 am

Foreclosed by. Ahmsi and Homeward sent me
Info .When I called then they had already put me with a collect agency. Fraud foreclosure.Am I getting a check? Lawsuit pending.