A check for $1,000 may not do much to offset the financial distress associated with a mortgage foreclosure, but that is the most many victims can expect under a recent government program intended to provide compensation for mortgage errors. The payments will range from $300 to $125,000.
Military veterans who incorrectly had their home foreclosed on while they were on active duty will receive the highest payments.
Bank regulators initially planned a review of all qualifying mortgage files, but soon discovered that the number of actual mortgage errors exceeded expectations. The automatic portion of the review was then terminated early. Consumers were allowed to ask for a review of their foreclosure files, and about 439,000 did so. These borrowers are expected to be paid twice as much as those who didn’t seek a review.
Overall, payments of $3.6 billion payable to 4.2 million borrowers are scheduled to begin on April 12 following an agreement reached by the Office of the Comptroller of the Currency and the Federal Reserve Board with 13 mortgage servicers.
Qualifying mortgages must meet the following criteria:
- Home that were in any stage of the foreclosure process in 2009 or 2010
- Mortgages were serviced by one of 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, and Wells Fargo.
Mortgage compensation checks will be sent in several waves beginning with 1.4 million checks on April 12. The final wave is expected in mid-July 2013. More than 90 percent of the total payments to borrowers at 11 of the 13 servicers are expected to have been sent by the end of April. Information about payments to borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley will be announced in the near future.
In most cases, borrowers will receive a letter with an enclosed check sent by the Paying Agent—Rust Consulting, Inc. Some borrowers may receive letters from Rust requesting additional information needed to process their payments. Previously, Rust sent postcards to the 4.2 million borrowers notifying them of their eligibility to receive payment under the agreement.
Rust is sending all payments and correspondence regarding the foreclosure agreement at the direction of the OCC and the Federal Reserve.
Borrowers can call Rust at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement. Information provided to Rust will only be used for purposes related to the agreement.
Borrowers should beware of scams and anyone asking them to call a different number or to pay a fee to receive payment under the agreement.
Accepting a payment will not prevent borrowers from taking any action they may wish to pursue related to their foreclosure. Servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against their servicer in connection with accepting payment.
Fort Lauderdale Foreclosure Defense Attorney
Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.