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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
Financial PR
September 09, 2013 at 3:38 pm

Orlando and PR are areas of major destinations....
And many air companies are cutting their airflights to these places.... They say it's because gas prices, but is that fair for people who usually travel back and forth?.... Business trips, or family visits for example.

Is it fair? What do you think?

Hilton Lee
August 30, 2013 at 9:47 am

Bank foreclose on my house for $227,000 owed. staright away sued me Post Foreclosure for $35,000 they Estimated was their loss.

Two months later bank sold house for $265,000.

Should I get a credit against the Judgement.

Missy
June 07, 2013 at 12:34 am

My husband and I went to the mortgage company and told them we were in trouble and asked for a modification. They told us that they could not help us until we were three months behind. I could not believe they were telling me this. If they helped us when we needed it, we would probably still have our house.

rick mari
June 03, 2013 at 1:10 am

i filed chapter 7 in 2009 i included my 1st and 2nd mortgage with chase in florida.. it was discharged in 2009 as well... they still say i owe them money.. how is this possible!!! i also filed a complaint with the ftc... i dont know how to stop the letters...
or if i even owe them anything should i ignore them????? does anyone know what i should do

Kat
May 30, 2013 at 10:20 pm

I live in kc mo and I am still waiting for a payment. Rust Consult, Inc. tells me I maybe waiting until August 2013. Each time I have called I get a different answer anything just to get me off the phone. I have done all that has been asked- completing and submitting W-9 form which stated once they recd form my check would be released and if I did not send it back by 6/30/2013 they would take 28% of the monies whatever that amount is. We do have a noise, we need soneone to fight for us.

Suzi
May 30, 2013 at 1:33 am

We fell behind on payments for a mortgage we shouldn't have even qualified for. I know our fault but we were told our payments would be $200 less then they were & 2 days before closing we were informed of the increase in payments & needed an extra $5,000 cash down. Sounds fishy but with our home at the time rented,4 days before Xmas & 5 kids to put a roof over you just agree to whatever. Fall behind on payments the bank offers us this program to catch up on payments. We do all the paperwork & make a low required payment to save our home & the next month the low payment more then doubles & they want that & a mortgage payment to stay. We were late with the extra money but sent it & the Sheriff was at my door. We couldn't even afford to pay for bankruptsy I gave all our money we had to the bank.

Dennis Bryant
May 17, 2013 at 7:43 pm

I got a check for 500.00 It should have been 25.000.00 they take the less of the violation and pay you out on that. In my book they are still crooks. And need to make things rite for people. AND THEY STILL ARE NOT DOING THAT. THEY SHOULD BE LOCKED UP,Like any one else would be.

melissa
May 14, 2013 at 8:10 am

I filed in a timely manner and I have not heard anything or received any money . what can I do ?

mel
May 14, 2013 at 8:09 am

I filed in a timely manner and still have not heard anything or received any money . what can I do ??

Yvonne
May 13, 2013 at 11:53 am

I am wondering about the legality of my loan. My husband was out of state at the time of closing, and my lender said in Michigan that it was illegal to sell a home to a married woman without her husbands signature. They are in the process of foreclosing on the home after we had to shut down our company due to the economy. I wonder if we qualify for anything?