01/07/2013 03:30:00 PM EST
10 Mortgage Servicers to Pay $8.5B to Help Foreclosure Victims
WASHINGTON, D.C. - (Mealey's) The Federal Reserve Board
and Office of the Comptroller of the Currency on Jan. 7 announced that 10 mortgage servicing companies that have been subjected to
enforcement orders since April 2011 over their foreclosure practices have
agreed to pay a total of $8.5 billion to assist borrowers.
According to a press release issued by the Federal
Reserve, the companies - Aurora Bank, Bank of America N.A., CitiBank, JPMorgan
Chase, PNC Bank, MetLife Bank, Sovereign Bank, SunTrust, U.S. Bank and Wells
Fargo Bank - will use $3.3 billion to make direct payments to eligible
borrowers and spend $5.2 billion for other assistance, such as loan
modifications and forgiveness of deficiency judgments.
The Federal Reserve stated that the agreement will
benefit more than 3.8 billion borrowers whose homes were foreclosed on between
2009 and 2010 and that eligible borrowers can expect to receive compensation
ranging from hundreds of dollars to $125,000, depending on the type of error
the loan servicer made.
The companies involved in the agreement were each
subjected to enforcement actions stemming from their conduct in processing and
handling foreclosures. Under the enforcement actions, the companies were
required to participate in an independent foreclosure review, which required
them to retain independent consultants to review their foreclosures. The
new agreement relieves the companies from the independent foreclosure review
and instead requires them to implement a broader program that allows eligible
borrowers to receive compensation more quickly.
A payment administrator will be appointed to make the
payments to eligible borrowers, and the borrowers must sign a waiver for any
legal claims as a condition for receiving the payment. The Federal
Reserve said borrowers can expect to be contacted by a payment agent by the end
Mealey's is now available in eBook
more information about LexisNexis products and solutions connect with us through
our corporate site.