Thirteen Mortgage Servicers Reach 9.3 Billion Settlement Agreement

The aftermath of the mortgage and housing crisis is not only affecting past homeowners, it looks as though a variety of mortgage servicers will be paying a hefty price for their behavior as well.   Currently, there are thirteen mortgage servicers who have been ordered to pay a grand total of $9.3 billion dollars in order to settle a variety of complaints that focus on mortgage processing methods, as well as unfair foreclosure processing methods.

On Thursday, the Office of the Comptroller of the Currency, along with the Federal Reserve announced the final settlement amount as amendments to enforcement actions against the thirteen responsible mortgage servicers. The mortgage servicers held responsible are Wells Fargo, JP Morgan Chase, Morgan Stanley, PNC, Sun Trust, U.S. Bank, Aurora, Bank of America, Goldman Sachs, Met Life Bank, Sovereign, HSBC, and Citibank.

The OCC and the Fed states that the grand total includes $5.7 billion in loan modifications and deficiency judgment forgiveness, and $3.6 billion in cash payments.

Banks Practiced Unfair Foreclosure Methods

The thirteen mortgage banks practiced improper and unfair foreclosure methods from 2009-2010.  Practices included robotic signatures or foreclosure documents and forwarding said documents to the court system without an actual agent going over them. These practices were investigated thoroughly, and the end result is a national settlement throughout the 50 states, engineered by the Attorney General.

Robotic signatures at one point in time were quite common in the debt collection industry.  A robo-signature would sign off on a complaint, allowing the courts to send out a legal summons to the debtor.  The debtor would only have so much time to respond to the complaint, often resulting in default judgments in favor of the debt collector, who in actuality never even read the complaint.  While the Fair Debt Practices regulations have definitely helped to minimize these practices, there are still debt collectors that engage in these types of practices.

Anyone that worked with one of these thirteen mortgage servicers who had their home in any stage of foreclosure between 2009 and 2010 will be included in the settlement amendments.  Currently, the total number of eligible borrowers is 4.2 million.

By the end of this month, Rust Consulting Inc. of Minneapolis plans on contacting all affected borrowers.  The agency specializes in class action settlement distributing, and will be dividing up the settlement in various amounts. Certain borrowers are entitled to a few hundred dollars in settlement funds, while others are entitled to larger amounts, the highest being $125,000.

Affected Borrowers Who Where Foreclosed On Between 2009-20010

All borrowers involved in the settlement do not need to take any action in order to receive their settlement payment.  Additionally, borrowers do not need to sign any type of waiver that forfeits any pending legal claims that are currently in progress against their mortgage servicer in order to obtain payment in the settlement.   Any borrowers in need of more information can contact Rust Consulting at  1-888-952-9105.

Federal regulators have stated that the $5.7 billion in assistance is to be used in the undertaking of loss mitigation efforts that are primarily focused on the prevention of home foreclosure.

First preferences will be given to specific practices that are designed to help borrowers stay in their homes, as these home preservation actions are both affordable and realistic for home owners.

GMAC Mortgage, One West and Ever Bank are yet to enter agreements with the regulators, and their foreclosure review process is ongoing. All three institutions oversaw 457,000 mortgages during a stage of foreclosure during 2009 and 2010.  The federal regulators currently expect that the reviews will be completed over 2014.

Author: Scott Skyles

Since 1995, Scott has been involved with over $1 Billion in mortgage fundings and is recognized as an expert in residential mortgage lending. Scott is licensed and able to originate mortgage loans in all 50 states. You may follow Scott on your favorite social networks: Facebook | Google+ | Twitter

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