Regulators should have a distribution plan finalized, or near ready, for more than $3.3 billion in a settlement fund earmarked for borrowers who were victims of improper foreclosure actions in 2009 and 2010, according to consent orders.
The regulators, the Office of the Comptroller Currency and the Federal Reserve, are working on a tight, self-imposed timetable, stating that eligible borrowers would be notified by the end of March.
According to the most recent OCC press release: “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.”
The settlement, which grew out of the failed Independent Foreclosure Review launched two years ago, will payout a total of $3.6 billion in cash payments and $5.7 billion in other assistance to borrowers, such as loan modifications and forgiveness of deficiency judgments.
The $3.3 billion marks the first phase of payments from 10 major lenders representing 13 mortgage servicers. Bank regulators set an immediate deadline of 15 days following the settlement’s consent decrees dated Feb. 28, 2013 for 10 lenders to fund the “Qualified Settlement Fund.”
The payments will be made based on a distribution plan developed by the two regulators.
Rust Consulting, Inc. has been retained by the mortgage servicers to distribute payments as directed by the regulators from the fund, and will serve as the “administrator” at the direction of the regulators.
The bulk of the money that was due by March 15 comes from three lenders: Bank of America ($1,127,453,261); Wells Fargo ($765,823,531); and JPMorgan Chase ($753,250,131).
Rust Consulting is not a law firm, as it states on its website, but a professional services company that helps clients with projects that require data management, notification, contact centers, claims processing, or fund distribution. Clients include government agencies, businesses, counsel for plaintiffs in class-action lawsuits or counsel for the defense (attorneys for the company that was sued).
“We have attorneys on-staff and frequently work with attorneys as we administer class action settlements or mass torts, but we typically are a neutral, third-party administrator,” Rust states on its website.
Up to 4 million homeowners may be eligible to compensation ranging from hundreds of dollars to $125,000, depending on the severity of harm inflicted by the mortgage servicers, from botched paperwork to outright wrongful evictions.
Here’s the breakdown of payments due by each lender to fund the Qualified Settlement Fund:
|Aurora Bank||$ 93,237,805|
|Bank of America||1,127,453,261|