Much of the $8.5 billion mortgage settlement announced this week is intended to compensate homeowners who either went through foreclosure, or were unable to qualify for a loan modification. My colleague, Jennifer Bjorhus, took a closer look at how to find out if you might be eligible. Here's what she found:
The settlement between banking regulators and 10 major mortgage servicers announced Monday came with scant instructions for the millions of homeowners who could be affected and eligible for compensation. A yet-to-be-appointed “payment agent” will be contacting some 3.8 million homeowners directly about the settlement by the end of March, regulators said. “Eligible borrowers will receive compensation whether or not they filed a request for review form, and borrowers do not need to take further action to be eligible for compensation,” federal bank regulators said in the joint release.
On Wednesday, a spokesman for the Office of the Comptroller of the Currency (OCC) said people can find out if they are in the pool of 3.8 million eligible borrowers by calling the independent foreclosure review number at 888-952-9105. Also, information about the settlement posted at www.independentforeclosurereview.com will be updated often to address frequently asked questions, said OCC spokesman Bryan Hubbard.
A Federal Reserve spokeswoman on Wednesday also suggested that homeowners can contact the company that serviced their mortgage to make certain the company has their full current contact information. The settlement covers more than 3.8 million borrowers who were in some stage of foreclosure in 2009 and 2010 with 10 mortgage servicing companies: Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo. Four banks who were originally part of the process did not sign on to the settlement: Ally Financial, HSBC, OneWest Bank and EverBank. Of the $8.5 billion, $3.3 billion is for direct payments to borrowers and $5.2 billion is for other help such as loan modifications.
Eligible homeowners are expected to receive payments ranging from hundreds of dollars up to $125,000, depending on potential errors or abuse, although it’s not clear how that will be determined for many people since the settlements stops the independent foreclosure review process that had been underway. The settlement aims at resolving the problematic reviews and speed compensation to borrowers. Only a fraction of the 3.8 million people had submitted claims for a review.
Since the reviews have been stopped, the extent of the wrong-doing during the foreclosures will likely never be known. Critics have called the settlement a victory for banks. The settlement does not require borrowers to waive any legal claims they may have against their servicer.