$9.3B Foreclosure Settlement Reached By 13 Banks

March 4 2013

17220s.jpg New York, NY: A $9.3 billion settlement has been reached between the federal government and 13 banks charged with foreclosure abuse.

The Federal Reserve and the Office of the Comptroller of Currency (OCC) reached the final settlement with Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

The banks were accused of improperly foreclosing on mortgages in 2009 and 2010 through practices including wrongful denial of modifications, flawed mortgage servicing and processing practices, improper fees, and robo-signing – a practice that has received wide-spread media attention in the past 24 months. Robo-signing involves the rapid approval and submission of foreclosure documents by the banks and third party agents, to the courts without proper review of those documents.

According to a joint statement issued by the Federal Reserve and the OCC, borrowers covered by the amendments include 4.2 million people whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the companies listed above. These borrowers are expected to be contacted by the Paying Agent--Rust Consulting, Inc.--by the end of March 2013 with payment details. The Paying Agent will send payments and correspondence.

Borrowers covered by the amendments are expected to receive compensation ranging from hundreds of dollars up to $125,000. Borrowers are not required to take any additional steps to receive the payments. In addition, borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment.

The agencies state that borrowers can call the Paying Agent at 1-888-952-9105 to update their contact information or to verify that they are covered by the amendments. Borrowers seeking assistance should work directly with their servicer or a counselor approved by the U.S. Department of Housing and Urban Development (HUD). Borrowers can reach HUD-approved counselors by calling 888-995-HOPE (4673).

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