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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
sou
May 12, 2013 at 4:16 pm

Should have been able to pay you loan

AJ Feinstien
May 10, 2013 at 10:55 pm

We got a measley $900. $900. This is freaking insane. According to the chart, we were owed $62K. This is just insane.

Manuela Carmona
May 10, 2013 at 2:06 pm

Yup I received a 300 check and now they said there was a mistake made??? I still feel like another slap on the face... So where is all this money going to , is this RUST getting a BIG bonus ??? Seems to me like there is something not right here!!! I wonder how many checks RUST family or even fake names going to them??? A foreign company this RUST is!!! I hope the review for the review lol come through ...

AAB
May 09, 2013 at 10:52 am

I received a $3,000.00 check, Litton had mortgage, but according to the above I should have received the $25,000.00 check, I had my load modified to a trial amount, made all payments then Litton refused to make it permanent and foreclosed. Are they baiting me with the $3,000.00 check which states "this is the final amount, no process to appeal"? If I cash this does it set me up to lose money????

Chelle
May 09, 2013 at 10:27 am

@Sharron, I just read that article this morning. There are no words to describe how incompetenly this entire process has been handled. Now how do we find out if we're in the 96,000 that will be getting a supplemental check? I keep saying I'm done with this whole ordeal, but then I keep reading articles like this one.

http://www.bankrate.com/financing/mortgages/foreclosure-review-checks-on-the-way/#comments

sharron
May 09, 2013 at 12:58 am

I just found a site that says if ur bank was Litton or Goldman Sachs and ur check was mailed last Friday SOME people will be getting a second check as they said Federal Reserve had directed them to pay consumers more than what they got, but "clerical" errors caused them to short some people on their checks so some people will get a second check n a letter as to why. It is obvious it is happening because they r being investigated due to the small amounts by Senate, so I feel it is a good sign all of us may get more later on!

Gloria
May 08, 2013 at 6:03 pm

I got a certified notice from post office, from rust. Was the check sent certified

Jorge
May 07, 2013 at 5:47 pm

I received our check today for $300. Litton loan had our mortgage.
RGV, Texas

melanie
May 06, 2013 at 7:10 pm

I feel that after having to deal with the foreclosure process for as long as I did with them finally just denying to modify and foreclosing I should get back the difference between what I owed and what they made on the sale and the amount that I paid prior to Citi forclosing. The total amount would be somewhere in the field of $70,0000. I lost my inheritance to Citi as well as my home due to them not being able to keep their paperwork in order.

tasha
May 06, 2013 at 5:48 pm

I received our check today for $400. Litton loan had our mortgage.