Mortgage companies to pay $9.3 billion to settle complaints

Bank of America was among 13 banks that agreed to pay $9.3 billion.
Bank of America was among 13 banks that agreed to pay $9.3 billion.
Posted: March 02, 2013

Thirteen mortgage servicers will pay a total of $9.3 billion to settle federal complaints over foreclosure-processing and loan-servicing methods.

The Office of the Comptroller of the Currency (OCC) and the Federal Reserve announced the final settlement Thursday as amendments to enforcement actions against the 13. Covered by the agreement are: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

Included in the amount are $3.6 billion in cash payments and $5.7 billion in other assistance to borrowers, such as loan modifications and forgiveness of deficiency judgments, OCC and the Fed said.

The mortgage servicers were accused of engaging in improper foreclosure methods in 2009 and 2010, including so-called robo-signing of documents - submitting them to the courts without having read them. A lengthy investigation of the practices followed, resulting in successful efforts by attorneys general of the 50 states to engineer a national settlement.

Borrowers covered by the amendments include 4.2 million people whose homes were in any stage of foreclosure in 2009 or 2010 and whose mortgages were handled by one of the 13 servicers.

Rust Consulting Inc. of Minneapolis, which specializes in class-action settlement administration, is expected to contact affected borrowers by the end of March. Those borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000.

The borrowers are not required to take any additional steps to receive the payments, nor will they be required to execute waivers of any legal claims they may have against their servicers as a condition for payment. (For more information, call Rust at 1-888-952-9105.)

In providing the $5.7 billion in assistance, the 13 servicers are expected to undertake loss-mitigation efforts focused on foreclosure prevention, the federal regulators said.

Preference will be given to efforts designed to keep borrowers in their homes "through affordable, sustainable, and meaningful home-preservation actions," according to the regulators.

For GMAC Mortgage, Everbank and OneWest, which did not enter agreements in principle with federal regulators, the independent foreclosure-review process is continuing.

Regulators expect the reviews for those servicers - which handled 457,000 mortgages that were in some stage of foreclosure in 2009 or 2010 - to be completed over the coming year.


Contact Alan J. Heavens at 215-854-2472, aheavens@phillynews.com or @alheavens at Twitter.

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