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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
carol
May 04, 2013 at 6:51 pm

I still have not received a check. who do I contact to find out the status

Keih
May 03, 2013 at 1:30 am

You people are stupid if you take them little azz check for them taking your home and kicking you out on the street!! Everyone should get a minimum of 100,000 or tell them to give you your house back!! Them crooks has already been bail out by the government so they arent giving you there money!! You people are too stupid to let these crooks take your homes and your money and put your dumb azzes out on the street!! What a bunch of dumb azzes!!

sharron
May 02, 2013 at 8:57 pm

Watch foreclosure news important tonight 8pm eastern time, on right now California time, big news on principal reductions n reviews too channel msnbc

sharronrosey
May 02, 2013 at 3:57 am

6 am calif time in morning please watch msnbc channel for info on this settlement on tv

Ashlea
May 01, 2013 at 11:26 pm

I don't understand.. The card we got said we would get no less than 840.00 but then got 600.00??? Anybody else have the same issue or know why??

maria
April 30, 2013 at 3:15 pm

Im in las vegas nv and my bank was bank of america and was sold to countrywide

Jennifer
April 30, 2013 at 1:25 pm

Melissa, yes cash it! I ahve been reading and researching all day.

Jennifer
April 30, 2013 at 1:23 pm

Also where do short sales fall in this category? Conveniently they have denied our short sale offers over the past few months, I have to wonder if it's looked at basically as a foreclosure, which would have meant completed, which would have meant more money to us. Even after they wrote us a faulty mortgage and stole our money right out from under us. Hey no biggy though right, these people don't have to live as a family of 5 in an apartment.

Melissa
April 30, 2013 at 1:14 pm

Due to a bad financial situation, I had to walk away from my house and file bankruptcy. I didn't try to save it. I never filled out any of the forms to put my name on the list, but I got a check anyway, which was totally surprising. I'm not sure if I should even cash it.

Jennifer
April 30, 2013 at 1:12 pm

Oh, how many things I feel I need to say! Julia Maestas said it well with the fact that this is all we get for the pain these rotten rotten companies have caused to many families. I have a question about the "Foreclosure review" process. I don't even know if we did one or not as we forwarded everythinig to our scum bag bankruptcy laywer. Any thoughts on how to find out?