Fed to Foreclosed Borrowers: Checks in the Mail Soon
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 regulators earlier this year.
A total of 4.2 million borrowers are eligible to receive payments, and checks to 1.4 million of them will be sent out Friday, the Federal Reserve and the Office of the Comptroller of the Currency said Tuesday.
The agreements with 13 mortgage servicers, including units of Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, provided $3.6 billion to borrowers who were at any stage of foreclosure at the height of the housing crisis.
Regulators entered into the settlements in January but at the time provided only estimates of amounts borrowers might receive.
The agreements were designed to end a case-by-case review of past foreclosures, since those proved slow and expensive, with some $2 billion going to consultants who conducted the reviews before eligible borrowers had received anything.
The agencies said Tuesday that 1,082 active-duty military borrowers who had completed foreclosures will each receive $125,000. About 50 borrowers who were not in default but had their homes seized will also receive that top payout.
Most of the borrowers, about 3 million, will receive between $300 and $600; many of the larger payouts are going to borrowers who requested reviews.
The announcement provides regulators with some good news ahead of a hearing scheduled for 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.
Sen. Elizabeth Warren and Rep. 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.