Several clients have begun receiving checks as a result of errors made by mortgage servicers. Unfortunately, the payments don’t begin to cover the actual loss suffered by many people who lost their homes to foreclosure or had to put up with multiple mortgage loan modification errors or problems. The checks result from a January 2013 settlement agreement between the nation’s top eleven mortgage servicers and federal banking regulators. Nearly four million people are eligible for the payments.
The payments range from $300 to $125,000 depending on the type of servicing error, whether a foreclosure had been completed or not and whether the borrower was an active duty member of the military. Not surprisingly, only about 1100 of the four million people eligible to receive payments are eligible to receive the largest amount of $125,000. The vast majority of borrowers will receive less than $1000. Payments will be received for a number of different categories, including where a servicer failed to engage with a borrower in a loan modification; where a modification request was denied; where a servicer completed foreclosure on a borrower performing all the requirements of a trial modification; where a servicer initiated foreclosure on someone in bankruptcy; where a mortgage servicer foreclosed on an active duty military member; and where a mortgage servicer failed to convert a borrower from a trial to a permanent modification. Borrowers who receive and accept these payments waive no rights or defenses they might have against a mortgage servicer. A chart showing the number of borrowers in each category and the payment amount designated for that category can be found on the website of the Office of Comptroller of the Currency.