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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
Kaz
April 29, 2013 at 12:22 pm

We received a check for $800, though we had to go through loan mod and we are under "Successful trial mod wasn't made permanent" which according to this article should give us $25000. What should we do? I tried to call the number, and went through all the messages, and was hung up.

Jorge Garza
April 29, 2013 at 10:32 am

I called Litton (Goldman Sacs) on Saturday 4-28-2013 and they told me checks are going to be mailed starting the beginning of May.

from the Lone Star State
Texas

j
April 28, 2013 at 6:22 pm

i filed for a review has anybody else if so what did you get

Julia Maestas
April 28, 2013 at 11:57 am

After my divorce I moved into our rental property and applied for a modification to help save me $100 dollars a month wich was lot for me and my three kids. I was put on a trial period and paid my three months when th modification was not finished I was told to continue to pay my trial payment amount. After eight months I recieved a letter that said I was denied a modification because I was not living in the property!!!! But I was living in the property, I called frantically to the bank. I also recieved a letter that they where forclosing on the property. They said to prove that I was living in the property and they would reinstate the modification.. So I did, but they would not ate me out of forclosure!!! After two more years and two more banks and many, many modification applications I recieved my modification. They added 16,000 to my loan and raised my payment $200 dollars.
I am lucky to still have my house I had many restless nights thinking me and my kids would be on the streets. All I know is I only receive 300 DOLLARS I will be offended how dare they abbuse so many and hurt so many and then slap them in the face with a check that says" this is all you pain is worth to me!!!!!!!"

Chelle
April 28, 2013 at 11:25 am

I believe Rust is lying, I'm not sure if the reps are doing this of their on accord because they are getting so many calls or if they are being directed to. I called and was told my check was mailed on 4/19 when I've already read on several web sites that borrowers who were serviced by Goldman Sacs and Morgan Stanley/Saxon will receive information on when their checks will be mailed later. As of 4/26 this is the information reported on the federal reserve. Has anyone who was serviced by Morgan Stanley/Saxon received checks yet?

sharron
April 27, 2013 at 12:51 pm

The Senate is for sure watching them and not at all pleased with the way they handled this settlement, with no rythme or reason as to who gets what and why,. Rep Elijah Bird entered a proposition bill HR1706 Independent Monitor Bill, asking for a monitor to redo the reviews appointed by President Obama that will also report the findings directly to Congress, great news!!

ajanta
April 27, 2013 at 11:36 am

I called Rust 4/19/2013 and was told that my check had been mailed. It is 4/27/2013 and still no check..getting the short end of the stick once again..

sharronrosey
April 27, 2013 at 3:46 am

Every time I post the link to the new proposed bill it will not post, I have tried over 10 times, now see if this posts, if so, will write more in a minute

j
April 26, 2013 at 11:52 pm

who asked for a review what did you get

j
April 26, 2013 at 11:36 pm

anybody got better news