Fed to foreclosed borrowers: checks in mail soon
WASHINGTON (Reuters) - Borrowers whose homes were in foreclosure in 2009 or 2010 can expect to receive between $300 and $125,000 under settlements reached between top banks and U.S. regulators earlier this year.
The payments, the majority of which fall in the $300 to $600 range, will begin going out on Friday, the Federal Reserve and the Office of the Comptroller of the Currency said on Tuesday.
The agreements with 13 mortgage servicers, including units of Bank of America Corp (BAC.N), Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N), Wells Fargo & Co (WFC.N), provided $3.6 billion in cash payments to borrowers who were at any stage of the foreclosure process at the height of the housing crisis.
Although regulators entered into the settlements in January, at the time they only provided estimates of what borrowers might expect to receive.
The settlements were designed to end a case-by-case review of past foreclosures, since those reviews proved slow and expensive, with some $2 billion going to consultants who conducted the reviews before any money had been paid out to eligible borrowers.
On Tuesday the agencies said 1,082 borrowers who were active duty members of the military had foreclosures completed on their homes and would receive $125,000 each. About 50 borrowers who were not in default but had their homes seized will also receive the top $125,000 payout.
The largest numbers of borrowers, around 3 million, will receive between $300 and $600, with many of the larger payouts going to borrowers, who had requested reviews under the case-by-case reviews.
A total of 4.2 million borrowers are eligible to receive payments, and checks to 1.4 million of them will be sent out on Friday, regulators said.
For a full breakdown of the payments, go to: here
The numbers do not yet include borrowers whose mortgages were serviced by units of Morgan Stanley (MS.N) or Goldman Sachs (GS.N), and regulators said they would release those numbers in the near future.
The payment announcement provides regulators with some good news ahead of a hearing scheduled on Thursday before a Senate Banking subcommittee, during which lawmakers are expected to criticize OCC and Fed officials for what they believe was an opaque and mismanaged review process.
Senator Elizabeth Warren and Representative Elijah Cummings have pressured the agencies to turn over more information about how they monitored the reviews and how consultants came to receive such vast sums.
(Reporting by Aruna Viswanatha; Editing by Lisa Von Ahn and Leslie Gevirtz)