WASHINGTON, D.C. - (Mealey's) The
Federal Reserve Board and Office of the Comptroller of the Currency yesterday 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 of March.
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