WASHINGTON — Mortgage servicers tied to the independent foreclosure review settlement will begin sending the first wave of $1.2 billion in checks to troubled borrowers on Friday, federal regulators said.
More than 4 million borrowers will be compensated as part of the amended settlements between the 13 mortgage servicers and the Office of the Comptroller of the Currency and the Federal Reserve Board. The regulators said Tuesday that payments will be sent out in waves with the first 1.4 million checks totaling $1.2 billion sent out this week. By the end of the month, about 90% of the cash payments will be sent with the final wave ending in mid-July.
Regulators also released further details in how it broke down payments for each borrower and how many people fit into each category — a question that has come up repeatedly since the agencies announced the settlement earlier this year. It has identified more than 3.9 million borrowers that will receive payments from $300 up to $125,000 depending on their status of foreclosure or modification. Based on the chart released by regulators Tuesday, more than 60% of the affected borrowers, or 2.4 million, will receive the lowest amount of $300. Only 1,135 borrowers are receiving the maximum amount.
Regulators reached the mortgage settlement in January after calling off a prolonged and costly independent foreclosure review. The settlements call for a total of $3.6 billion in cash payments to borrowers who faced foreclosure in 2009 or 2010 and were serviced by one of the 13 companies. Those companies are: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo. Only Goldman Sachs and Morgan Stanley did not provide payment information but it's expected to be announced "in the near future," the regulators said.
Borrowers who receive a payment from the settlement can still take any other action against their mortgage servicer. The servicers also cannot ask borrowers to waive any legal claims when accepting the payment.