The Office of the Comptroller of the Currency and the Federal Reserve said today that 4.2 million borrowers will begin receiving payments in the range of $300 to $125,000 beginning this week as a result of settlement with mortgage servicers that had foreclosed on home mortgages in 2009 or 2010. The payments will total $3.6 billion in cash and the two federal agencies expect that 90% of borrowers whose loans were being collected by 11 of 13 servicers will have their checks by the end of this month.
The 11 servicers that will be making payments include Aurora, Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), HSBC Holdings PLC (NYSE: HBC), J.P. Morgan Chase & Co. (NYSE: JPM), MetLife Inc. (NYSE: MET), PNC Financial Services Group Inc. (NYSE: PNC), Sovereign, SunTrust Banks Inc. (NYSE: STI), U.S. Bancorp (NYSE: USB) and Wells Fargo & Co. (NYSE: WFC). Payment information for the remaining two banks, Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS), is still to be announced.
The payments are part of an $8.5 billion settlement of claims related to shoddy mortgage foreclosure procedures, including the notorious robo-signing practice. The remainder of the settlement amount will be used to resolve other issues, including loan modifications. The settlement, which was announced in January, was made in addition to a $26 billion settlement the banks and servicers reached in 2012.