Lenders in settlement to make payouts to foreclosed borrowers

Posted: April 19, 2013 in Arroyo Grande, California Real Estate News, Grover Beach, Oceano, Pismo Beach, Rancho Grande

As part of a settlement with federal regulators, 13 lenders this week are starting to pay out $3.6 billion to more than 4 million troubled borrowers whose homes were in foreclosure proceedings in 2009 and 2010.

A chart released Tuesday by the regulators showed that most of the borrowers would receive $300, the minimum allowed under the settlement terms. The maximum of $125,000 would go to 1,135 borrowers whose homes were seized while they were serving in the military or who were current on their payments.

The settlement replaces a failed process in which bank regulators required large mortgage servicers to hire consultants to audit foreclosures for wrongdoing. The process proved so costly and time-consuming that it was called off, and the independent auditors were replaced by the general settlement — a debacle that has drawn criticism from advocacy groups and others.

The first wave of checks, totaling $1.2 billion, is to be sent Friday, with 90% of the payments to be made by the end of April, according to the Federal Reserve and the Office of the Comptroller of the Currency, the Treasury Department agency that regulates national banks.

Another wave of payments, to be made after borrowers provide additional information, will go out in mid-July, the Fed and OCC said. The check recipients will total about 4.2 million.

 

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