WASHINGTON — Tens of thousands of homeowners who took out mortgages with Goldman Sachs and Morgan Stanley will begin to receive their settlement payments this week for botched foreclosure practices.
The two financial institutions will dole out a total of $247 million in direct payments to more than 220,000 borrowers whose homes were in the foreclosure process between 2009 and 2010, the Federal Reserve Board said on Monday. Payments will start on Friday, May 3.
Borrowers can expect to receive anywhere from $300 to potentially $125,000. The Fed said that the amount each borrower receives varies based on the stage of the foreclosure process and the type of possible servicer error.
The agreement is part of the $3.6 billion settlement with the 13 largest mortgage servicers and two federal agencies -the Fed and the Office of the Comptroller of the Currency -- for faulty foreclosure practices
The Fed alerted Goldman and Morgan Stanley borrowers that their payments could be different from what borrowers had received from the 11 other mortgage servicers.
"In some cases, the payment amounts for Goldman Sachs and Morgan Stanley borrowers differ from those received by borrowers in the same categories with the other 11 servicers," according to the Fed's press release. "The amounts differ because borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley were not able to request a review of their foreclosure file."
Like the agreement with the 11 other servicers, these borrowers will still be able to take further action related to their foreclosure even if they accept the settlement payment.
The Fed said most borrowers will receive a letter with an enclosed check by Rust Consulting Inc. Others may receive requests for further information to process their payments.
As of April 26, roughly 1.2 million checks have been cashed or deposited by borrowers totaling roughly $1.2 billion dollars of the payment money.