Jan. 8, 2013 – Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing reached an agreement to pay more than $8.5 billion in cash and other aid to help borrowers, the Federal Reserve announced Monday.
This “agreement in principle” was worked out among the servicers, the Fed and the Office of the Comptroller of the Currency.
The agreement provides for the following:
- $3.3 billion in direct payments to eligible borrowers;
- $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments.
The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve and the Office of Thrift Supervision. It covers more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010.
Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error, the Fed said.
This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. For these participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an independent foreclosure review.
The agencies continue to work to reach similar agreements in principle with other servicers that are not parties to the agreement announced Monday but which are subject to enforcement actions.