The nation’s top banking regulators have some good news for some troubled homeowners: the checks will be in the mail soon.
Months after brokering a multibillion dollar settlement with banks over foreclosure abuses, the Federal Reserve and the Office of the Comptroller are set to dole out roughly $1.2 billion in the first batch of payments. By April 12, the regulators expect to mail 1.4 million checks. An additional round of checks will be sent out by the middle of July, according to the regulators.
The settlement, which scuttled a deeply flawed review of millions of loans in foreclosure, will ultimately provide $3.6 billion in cash relief to borrowers who entered foreclosure in 2009 or 2010.
Among those borrowers in the first group to receive relief are the 1,082 service members who banks foreclosed on illegally. Under the settlement, each borrower will receive roughly $125,000, the largest amount of relief.
Homeowners who were foreclosed on even though they never missed a single mortgage payment will also receive a check in the first round of payments. The Comptroller’s Office said that 53 such borrowers. whose homes will receive $125,000. Another 626 homeowners who were wrongfully foreclosed on will be get between $5,000 and $15,000 in relief because the foreclosure wasn’t completed or it was reversed .
The largest category of borrowers slated to get cash are the more than half a million homeowners who were deprived of loan modification or other loss mitigation assistance. The 568,476 borrowers that fall into that group will receive $300 each.
For millions of Americans battling to save their homes, the checks are the first federal lifeline in years, according to housing.
In January, the Comptroller’s office scuttled the foreclosure review, which was hobbled by delays and inefficiencies. Instead, the regulator brokered a $9.3 billion settlement, comprised of $3.6 billion cash payments and other forms of relief. The review, which was hastily dismantled, was ordered by bank regulators in 2011 amid mounting concerns that banks were churning through piles of foreclosure files without reviewing them for accuracy.
But the independent consultants, hired to pour over millions of loan files, only reviewed a sliver of the foreclosed loans. As homeowners languished, regulators opted to end the review in favor of the settlement. Even so, many homeowners have been waiting to receive relief.
The announcement of the payments comes just days before the Senate Banking Committee is scheduled to hold a hearing on the foreclosure review. Last week, the Government Accountability Office issued a scathing report that took aim at the Federal Reserve and the Office of the Comptroller of the Currency.
The regulators, the report found, created a dizzying bureaucratic process that ultimately slowed relief to homeowners. Problems with the review began almost from the outset in November 2011, the report said.
