The first wave of checks for eligible borrowers covered by the recent foreclosure agreement with 13 mortgage servicers will be sent April 12, the Federal Reserve and Office of the Comptroller of the Currency (OCC) announced Tuesday.
In January 2013, the Fed and OCC reached a foreclosure agreement with 13 servicers--Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
As part of the agreement, the servicers collectively agreed to pay $3.6 billion in cash and $5.7 billion in other foreclosure prevention assistance to settle charges related to deficient foreclosure and servicing practices.
Only borrowers who were in any stage of the foreclosure process between 2009 and 2010 and had a mortgage serviced by one of the companies in the settlement are eligible for payment relief.
About 4.2 million borrowers should expect to receive checks ranging $300 to $125,000. The first phase of payments will include 1.4 million checks, with the final phase of payments scheduled to be sent in mid-July 2013.
With the exception of Goldman Sachs and Morgan Stanley, 90 percent of total payments from the servicers should be sent by the end of April.
Payment details for eligible borrowers of Goldman Sachs or Morgan Stanley will be revealed at a later time, according to a release from regulators.
Rust Consulting, Inc., the paying agent, will send a letter with a check to borrowers. Though, some borrowers might receive letters from Rust requesting additional information to process their payments.
Borrowers can call Rust at 1-888-952-9105 to update their contact information or to confirm if they are one of the eligible borrowers.
The settlement replaces the Independent Foreclosure Review Process for the 13 servicers. As part of consent orders issued in April 2011, federal regulators required 14 servicers to hire independent consultants to provide foreclosure reviews to identify borrowers who may have been harmed by faulty foreclosure practices. The review process, however, turned out to be costly and inefficient in its ability to compensate borrowers.
OneWest, Everbank, and GMAC Mortgage also entered into the consent orders in 2011 with regulators but are continuing with the foreclosure review process. Goldman Sachs and Morgan Stanley were issued separate consent orders from the Fed in 2012 that required a foreclosure review.
The announcement from regulators also warned borrowers to be aware of scams and anyone asking them to call a different number or to pay a fee to receive the payment.