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Over $3 Billion in Checks Sent to Foreclosure Victims

APR 26, 2013 1:52pm ET
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Major servicers sent a third wave of checks on Friday to borrowers who were harmed during the foreclosure process, according to the Office of the Comptroller of the Currency.

The third wave included 927,000 checks totaling $794 million.

So far, checks totaling $3.2 billion have been sent to 3.7 million households.

“As of April 25, nearly 1.2 million people have cashed or deposited $1.1 billion in checks,” OCC said.

This compensation is the result of a settlement 13 servicers entered into with the OCC and the Federal Reserve Board. During special examinations, the two regulators discovered serious foreclosure processing violations.

The servicers were instructed to hire consultants to identify persons in foreclosure during 2009 and 2010 that were financially harmed. But the consultants were taking so long the regulators stopped the reviews and devised a shortcut to expedite the compensation process.

Under the expedited approach, more than half of the roughly 4 million borrowers entitled to compensation will receive just $300. And three-quarters of the borrower will receive less than $1,000. The highest amount of compensation is $125,000.

Overall, 4.2 million borrowers are expected to receive $3.6 billion in compensation from the 13 servicers—Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo.

A fourth wave of checks is slated to be sent May 3. Goldman Sachs and Morgan Stanley have not sent any checks yet.

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