More than 1,000 VA and military households will receive at least $125,000 each under still-another mortgage settlement.
The latest settlement between the mortgage industry and the government is a $9.3 billion deal between major servicers, the Federal Reserve and the OCC, the Office of the Comptroller of the Currency, a part of the Treasury.
Most of the settlement is in the form of $5.7 billion in “other assistance” to borrowers, however there is also $3.6 billion in cash, with checks going out to some borrowers as early as this month.
The settlement is designed to compensate borrowers who received foreclosure notices in 2009 and 2010. Initially the government wanted mortgage servicers — the folks who collect monthly payments and initiate foreclosures — to individually review borrower files to see who, if anyone, should be paid, but the review process turned into a massive fiasco: $2 billion was spent reviewing files without a single dollar being paid to any wronged borrower.
I know what you’re thinking: Wouldn’t $2 billion pay for a lot of VA benefits, lots of preschool classes or at least a couple of better bridges?
But I digress. The independent foreclosure reviews were dumped in favor a system which sorts borrowers into various categories. Depending on the category, payments range from $300 to as much as $125,000.
So how was it determined who should get what? OCC spokesman Bryan Hubbard told us that “borrowers were placed into categories based on objective loan attributes.”
For vets and military families, there are several important categories.
First, we have 116 VA and military borrowers who faced foreclosure but were protected under the Servicemembers Civil Relief Act (SCRA). Because foreclosure actions against these borrowers were withdrawn they will receive $15,000 each.
Second, there were 1,082 VA and military borrowers who were foreclosed despite coverage by SCRA. Each borrower will receive $125,000.
Third, SCRA limits the interest that can be charged to qualified individuals. Under the settlement 424 vets and military households will receive $300 “or the amount overcharged and paid by the borrower, whichever is greater.”
The End of Disputes?
Is this the end of the servicer disputes? Not likely.
“Receiving a payment as a result of the Independent Foreclosure Review settlement will not prevent you from taking any action you may wish to pursue related to your foreclosure,” says the OCC. “Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment.”
Several additional servicer settlements will likely emerge in the next few weeks, again with specific compensation for vet and military households. Watch this site for more information.
Photo courtesy basykes