Updated 06.14.2013: Claimants under the National Mortgage Settlement have started to get their long-awaited checks this week, most reporting amounts of $1,484.
Nearly 1 million checks were to be mailed beginning this week, totaling nearly $1.5 billion in compensation from five top U.S. lenders that are part of the settlement reached early last year over mishandled or wrongful foreclosure documentation that came to be known as “robo-signing.”
Statements from state attorneys general before checks were mailed on Monday put the payout amount at about $1,480.
Homeowners should be wary of scams, settlement administrators say. “Unscrupulous companies are contacting homeowners with offers of assistance for a fee to receive the settlement payment,” administrators say in a statement. You should not pay a fee to receive a payment.
Earlier this month, state attorneys general provided the following information regarding this week’s payouts:
- Some borrowers will receive a check for less than the approximate $1,480 payment in situations where borrowers are divorced or separated and no longer live at the same address. The full per-loan amount will be paid on these loans, but the payment will be evenly split between the borrowers.
- A small number of borrowers who submitted a claim form but do not have a valid Social Security number on file will be delayed in receiving their payments while tax-related issues are addressed.
- Two servicers — JPMorgan Chase and Citi — recently provided information on an additional 31,000 borrowers nationwide, and thus they could not be included in this distribution. Later this summer, these consumers will receive a notice and will have the opportunity to submit a payment application.
The National Mortgage Settlement (NMS) is separate from the Independent Foreclosure Review, under which 4 million eligible borrowers started to receive checks in April.
Rust Consulting is the payments administrator for both the National Mortgage Settlement and the Independent Foreclosure Review.
The NMS was reached between federal/state officials and the banks — Ally/GMAC; Bank of America; Citi; JPMorgan Chase; and Wells Fargo.
The compensated borrowers lost their homes to foreclosure between January 1, 2008 and December 31, 2011.
Claim forms were mailed to eligible borrowers in late September/early October of 2012. The deadline to respond was Jan. 18 of this year.
The largest component of the NMS is mortgage modifications or partial debt forgiveness.
The NMS has provided assistance to an additional 621,000 homeowners, which has reached $50.63 billion through March 2013 in the form of mortgage modifications, short sales, second-lien or other principal forgiveness, and refinancing help.