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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
knowitall
March 30, 2014 at 6:55 am

We got two checks one for $500 and one for $1800.

we were offered a loan modification after we had some foundation damage. all payments were made through auto debit, so naturally it was on time and the correct amount the bank wanted/needed....we filed bankruptcy to save our house but they still managed to foreclose although our home should have been off limits. doesn't make up for our life savings gone ($65K) and credit ruined.. no way we will ever have enough money to buy another home :(

Illiana
March 20, 2014 at 10:45 am

Hi! I bought my house in MN and gave it back to the bank on June 2013.
I haven't received or phone call,information or check from Wells Fargo.

Mary
February 09, 2014 at 7:32 pm

I also received a 1099-MISC from Rusting Consulting, Inc. for $3000 I never received. Since this 1099 was sent to the IRS also and I am going to be taxed on this money, I expect to receive it. I have not tried to call Rusting Consulting yet because its the weekend. I'm not very happy about this at all.

Boatman
February 03, 2014 at 8:38 pm

Long monday. Got home. Read mail. Guess what I got? A letter with a copy of a 1099-misc from fund 2 blah blah blah Paying Agent RUST CONSULTING INC. Goes on to say that I received a payment of XXXX in 2013, it was being reported to the IRS, and that I would need when I file my taxes for 2013. ONE PROBLEM? I NEVER RECEIVED A DIME AT ANY TIME FROM ANYONE regarding my foreclosure. Tried the 1-888 number DURING BUSINESS (BANKERS) Hours! No Luck, just good bye and disconnect after listening to ALL the messages. Now I'm sending a cert. letter to Rust and to the state attorney general regarding this matter.

Jim
January 30, 2014 at 5:29 pm

So after reading all these bumbles that BofA made, could anyone explain to me why they (BofA) would still play games? I had to file Chapter 7 in 2010 was discharged in 2011 (which included my home) here it is going on February 2014 and the home still never made it to forclosure, my name remains on Deed and it is preventing me from obtaining a mortgage .
I tried Deed in Lieu, after cleaning up the home, ( 2 whole days to do that, house sat empty since 2010 squatters moved in and trashed the house) they were satisfied with the clean up then 3 weeks later tell me the application for deed in lieu is cancelled because the home has over $10,000 in damage. So here we sit, wanting to get back on track with our lives, but these idiots would rather leave the home empty and drag their feet and it only prolongs us from ever buying another home.
So once you overcome Bankruptcy and wait two years after discharge, your punished yet again for another three years once the forclosure actually happens. Make sense to me.......Not!
Hello Goverment, Fannie Mae Freddie Mac , wake up, do you not see a issue here? US Tax paying fully employed citizens being denied mortgages, wanna stimulate the economy? Start with me please.
Thanks for listening and reading.

gratissex
January 28, 2014 at 7:10 am

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luis h villeda
November 23, 2013 at 10:32 pm

I didn't resive any papers to fill out about this foreclose review so how do I know if I qualify for something else .I'm just getting $300 is there any way to know

sandy
October 30, 2013 at 1:41 pm

my daughter received a check for 3000.00 yesterday. she had tried to get the bank to work with her and they refused..she lost her house :(

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