This month, 4.2 million mortgage borrowers will start receiving checks in the mail that will range from $300 to $125,000, courtesy of federal enforcement actions against mortgage servicers.
The payments are the result of January 2013 agreements between the Office of Comptroller of the Currency and the Federal Reserve System, and 13 mortgage servicing companies, after the federal regulators determined the companies had engaged in deficient practices in loan servicing and foreclosure processing.
The $9.3 billion agreement includes $3.6 billion worth of direct cash payments to borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank or Wells Fargo.
The enforcement agreement also requires the servicers to provide $5.7 billion in foreclosure prevention assistance, such as loan modifications and forgiveness of deficiency judgments.
April 12 will mark the first day checks are cut and mailed by the paying agent, Rust Consulting. Some 1.4 million checks will go to borrowers whose mortgages were serviced by all servicers except Goldman Sachs and Morgan Stanley.
The final wave is expected in mid-July 2013. More than 90% of the total payments to borrowers at those 11 servicers are expected to have been sent by the end of April. Information about payments to borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley will be announced soon, the Fed said.
Some borrowers may receive letters from Rust, at the direction of the two regulators, requesting additional information needed to process their payments. Previously, Rust sent postcards to the 4.2 million borrowers notifying them of their eligibility to receive payment under the agreement.
Borrowers can call Rust at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement. The Fed warned on its website that borrowers should beware of scams and anyone asking them to call a number different from the one listed above, or to pay a fee to receive payment under the agreement.