Goldman Sachs and Morgan Stanley have agreed to pay $557million in cash payments and other assistance to help mortgageborrowers.

The payout is part of an agreement the two banks reached withthe Federal Reserve Board as a result of enforcement actions fordeficient practices in mortgage loan servicing and foreclosureprocessing.

Previously, the Office of the Comptroller of the Currency andFed reached agreements with 10 additional big banks. IncludingGoldman Sachs and Morgan Stanley, the regulators have provided morethan 4 million borrowers with a total of $3.5 billion in cashcompensation, while an additional $5.5 billion will be provided bythe servicers for mortgage assistance.

The sum paid by Goldman Sachs and Morgan Stanley includes $232million in direct payments to eligible borrowers and $325 millionin other assistance, such as loan modifications and forgiveness ofdeficiency judgments.

More than 220,000 borrowers whose homes were in foreclosure in2009 and 2010 with the former subsidiaries of Goldman Sachs (LittonLoan Servicing LP) and Morgan Stanley (Saxon Mortgage ServicesInc.) will receive cash compensation.

Eligible borrowers are expected to receive compensation rangingfrom hundreds of dollars up to $125,000, depending on the type oferror.

An agent will be appointed to administer payments to borrowerson behalf of the servicers. Eligible borrowers will be contacted bythe payment agent by the end of March with details.

Borrowers will not be required to execute a waiver of any legalclaims they may have against their servicer as a condition forreceiving payment. In addition, the servicers' internal complaintprocess will remain available to borrowers.