Regulators Outline $9.3B Foreclosure Compensation Plan for 13 Servicers

Over four million homeowners may berneligible for compensation for mortgage servicer-related problems underrnagreements announced today.  Thernagreements with 13 servicers for deficient practices in mortgage loan servicingrnand foreclosure processing were originally reached with the Office ofrnComptroller of the Currency (OCC) and the Federal Reserve Board inrnJanuary.  Amendments to enforcement actionsrnagainst the servicers that memorialized the agreements were released Thursdayrnand will release the servicers from completing which will replace thernIndependent Foreclosure Reviews.</p

The amendments require the servicers tornprovide $9.3 billion in payments and other assistance to an estimated 4.2rnmillion borrower customers of the companies who had homes in any stage of thernforeclosure process in 2009 or 2010.  Thesernborrowers are expected to receive compensation ranging from hundreds of dollarsrnup to $125,000.  Mortgage assistance is expected to comprise $5.7 billionrnof the total and cash payments the remaining $3.6 billion. </p

In providing the assistance servicers are expected to undertakernwell-structured loss mitigation efforts focused on foreclosure prevention, withrnpreference given to activities designed to keep borrowers in their homes.rn OCC and Federal Reserve examiners continue to monitor the servicers’rnimplementation of corrective actions required by the original enforcementrnactions to address unsafe and unsound mortgage servicing and foreclosurernpractices.</p

Borrowers are not required to take anyrnadditional steps to receive the payments. rnThey will be contacted by the Paying Agent, Rust Consulting, Inc. withrnpayment details, probably by the end of March.  In addition, borrowersrnwill not be required to execute a waiver of any legal claims they may havernagainst their servicer as a condition for receiving payment.  </p

The amendments involve Aurora, Bank of America, Citibank, Goldman Sachs,rnHSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust,rnU.S. Bank, and Wells Fargo.  </p

Three other servicers,  GMAC Mortgage,rnEverbank, and OneWest did not enter agreements and their part in the IndependentrnForeclosure Review process continues.  Their reviews, involving approximatelyrn457,000 mortgages, are expected to be completed in the coming year.

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