Mishandled Foreclosures Yields These Pay-Outs from Big Banks
U.S. banks — including JPMorgan Chase & Co (NYSE:JPM) and Citigroup Inc. (NYSE:C) — will dole out up to $125,000 plus equity to individual clients negatively affected by poorly handled foreclosures in 2009 and 2010, in compliance with a remediation plan announced by bank regulators. Thomas Curry, U.S. comptroller of the currency, released a statement reading: “While we’ve made great strides since we took enforcement action against large mortgage servicers last year, much work is still ahead.” The industry guidance announced now “helps people who are considering requesting a free review to understand how they may be compensated for the financial injury they may have suffered.”
Last year, an assembly of the largest mortgage servicers were commanded by the Office of the Comptroller of the Currency, plus other banking regulators, to modify their foreclosure procedures and bring on independent consultants to analyze whether customers were unfairly affected by their tactics in 2009 and 2010. The 14 banks in this group, which also includes Wells Fargo & Co. (NYSE:WFC), may face a mandate to pay out lump sums between $500 and $125,000 in each case that meets regulator standards for improper practices.
In addition to these payouts, loan servicers who acted unsuitably regarding foreclosures might be made to rescind them, change loans, or correct credit reports, according to new industry guidance released today by the OCC and the Federal Reserve. Nearly 200,000 customers had asked for reviews of their cases by the end of May; of these, 144,817 were selected for analysis by consultants. Additionally, borrowers whose homes were lost to foreclosure in 2009 and 2010 were granted a deadline extension to September 30 (from July 31) to request their cases be analyzed for possible errors and misrepresentations (submissions can be made via www.independentforeclosurereview.com).