More than 4.2 million borrowers eligible for payments under the settlement tied to the Independent Foreclosure Review have started getting notices in the mail, but they contain few details — and no checks yet.
The firm handling the notices and eventual payouts, Rust Consulting, sent cards out March 18, according to a brief statement from the Federal Reserve. The cards say that payments won’t be distributed for another month or two. They also say borrowers may have to fill out additional paperwork.
“For more information, please call 1-888-952-9105, which is the number for Rust Consulting — the Paying Agent — that is printed on each postcard,” the Fed states.
The Fed is also warning consumers to watch out for scams. “Beware of anyone who asks you to call a different phone number than the number above or to pay a fee to receive a payment under the agreement.”
The $9.3 billion agreement between regulators and 13 mortgage services settles improper foreclosure actions, ranging from shoddy paperwork to wrongful evictions, during 2009 and 2010. The deal ended the “Independent Foreclose Review” of files from the 13 servicers after 18 months at a cost of nearly $2 billion.
Fed Chairman Ben Bernanke said earlier this month in congressional testimony that the reviews had not made much progress. He also said that “we will have checks going out to borrowers in just a few weeks.”
Borrowers who have commented on eCreditDaily say the cards they received Thursday provided few details. There were expectations that the correspondence would contain more information based on previous statement from the Office of the Comptroller of the Currency (OCC).
“I got a card from Rust Consulting today saying that I was eligible for a payment but it didn’t state how much… It also said that a check or paperwork asking for add’l information will be sent in 4-8 weeks,” one borrower said.
Another said: “I got my card today also with the same lack of information.”
But borrowers still don’t know the precise payment structure, except that compensation ranges from hundreds of dollars up to $125,000, based on the seriousness of the wrongdoing by the mortgage servicer. The settlement will pay out 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 federal bank regulators overseeing this process are currently working on the details as to how payments will be determined,” the settlement site’s FAQs section states.
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.”
Regulators are working on a distribution plan for more than $3.3 billion in a settlement fund earmarked for eligible borrowers, according to Feb. 28 consent orders.
The Independent Foreclosure Review process continues for borrowers with mortgage loans from the following servicers: EverBank/EverHome Mortgage Company, Financial Freedom (OneWest), GMAC Mortgage, and IndyMac Mortgage Services (OneWest).
The following lenders are funding the payouts: Bank of America, Wells Fargo, JPMorgan Chase, Aurora, Citibank, Goldman Sachs, HSBC, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust and U.S. Bank.