Ten of the largest mortgage servicing companies have reached an agreement to pay a collective $8.5 billion to borrowers as a result of deficient servicing and foreclosure proceedings that took place during the foreclosure crisis. The companies have agreed with the Federal Reserve Board and Office of the Comptroller of the Currency (OCC) to make the payments in cash and other borrower assistance such as loan modifications.
The servicing companies include Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo will be responsible for payment under 2011 enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing.
Eligible borrowers are subject to receive cash up to $125,000, depending on the type of servicer error.
“The OCC and the Federal Reserve accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process,” the agencies stated.
The agencies will continue to work on settlements among smaller servicers not included under the settlement announced this week.
Written by Elizabeth Ecker