Many of the borrowers who have received a check from Rust Consulting under the so-called foreclosure review settlement are wondering why their payments were less than the minimum $840 they were told they would get.
“Why did the paperwork promise a minimum of $800 per homeowner and now its $300?” one reader asks.
“On a letter I received it said that I would receive no less than $840,” another reader writes.
Let’s clarify the confusion.
A pair of settlements
There are two mortgage settlements in which borrowers will receive checks this year. The one that will pay borrowers a minimum of $840 is the National Mortgage Settlement, which resulted from negotiations between 49 state attorneys general, the federal government and five of the nation’s largest banks. These payments have not been mailed out yet. (Oklahoma didn’t participate in the settlement.)
The checks that borrowers are receiving now resulted from a settlement led by the OCC with 13 banks to halt the review of foreclosure files for borrowers who had homes in foreclosure in 2009 and 2010.
- Can you get a payment under both settlements?
If you meet the criteria for both, you may get two checks. Receiving a check for the foreclosure review settlement will not stop borrowers from receiving payment under the national mortgage settlement, says Geoff Greenwood, communications director for the Iowa attorney general.
- National Mortgage Settlement payments totaling $1.5 billion:
This is for borrowers who lost their homes to foreclosure between 2008 and 2011 and had loans that were not owned by Fannie and Freddie and whose were serviced by one of the five lenders: Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo.
Claim forms were mailed out to eligible borrowers last year, around September and October. Only borrowers who submitted claim forms will receive payments. The deadline to submit the forms was in January. This is different than having submitted a request to the OCC for a foreclosure review.
Based on the number of eligible borrowers and the $1.5 billion available for cash payments, borrowers who submitted a claim will receive a minimum of $840, but likely more because many borrowers probably didn’t respond.
Regulators are in the final stages of processing the claims and the checks are expected to be mailed out by early summer, Greenwood said.
To make matters more confusing, the paying agent in both settlements is Rust Consulting. If you get mail from Rust Consulting, don’t throw it away.
- Foreclosure ‘review’ settlement payments totaling $3.6 billion:
This is for borrowers who were in foreclosure in 2009 and 2010 and whose loans were serviced by one of the 13 banks in the agreement. More than 4 million borrowers will receive checks ranging from $300 to $125,000. Most checks are less than $1,000. The majority of these checks will be sent by the end of April.