Independent Foreclosure Review: 10 Banks Agree to $3.3B in Payments, $5.2B in Mortgage Help

Independent Foreclosure Review: 10 Banks Agree to $3.3B in Payments, $5.2B in Mortgage HelpThe 20-month-old Independent Foreclosure Review is now officially a settlement with 10 mortgage servicing companies that will provide more than $8.5 billion in cash payments and other assistance to wronged borrowers.
Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible mortgage servicer error.
The settlement announced today by regulators stems from their April 2011 enforcement actions against the banks for “deficient practices in mortgage loan servicing and foreclosure processing.” It is separate from the $25 billion National Mortgage Settlement reached last year with the top five lenders.
The Office of the Comptroller of the Currency (OCC), the Federal Reserve Board and the Office of Thrift Supervision initiated the enforcement action and negotiated the deal with 10 of the 14 mortgage servicers that were part of the Independent Foreclosure Review.
The agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
The payout sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments.
The agreement targets more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers. The regulators said that they borrowers “will receive cash compensation in a timely manner.”
“For these participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an Independent Foreclosure Review,” the regulators said in a statement.
As a result of the agreement, the participating servicers would cease the Independent Foreclosure Review, which involved case-by-case reviews, and replace it with a broader framework allowing eligible borrowers to receive compensation significantly more quickly.
“The OCC and the Federal Reserve accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process,” the regulators’ statement said.
Eligible borrowers will receive compensation whether or not they filed a request for review form, and borrowers do not need to take further action to be eligible for compensation.
A payment agent will be appointed to administer payments to borrowers on behalf of the servicers.
Eligible borrowers would be contacted by the payment agent by the end of March with payment details.
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. In addition, the servicers’ internal complaint process will remain available to borrowers.

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