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Homeowners Say Foreclosure Settlement Checks are Smaller than Promised
By Sarah Pierce
UPDATE 5.9.13: Federal Reserve announces additional checks will be mailed to 96,000 borrowers due to errors that caused them to receive checks that were too low.
Two weeks after homeowners reported they were having problems cashing their checks from the $9.3 billion bank foreclosure abuse settlement comes reports of a new injury: the checks are much smaller than regulators promised.
Federal regulators announced the settlement in March following a lengthy investigation into allegations that Bank of America, Wells Fargo, JPMorgan Chase and nine other banks engaged in improper foreclosure methods in 2009 and 2010. The first wave of settlement checks were mailed starting April 12 and will continue through July 2013.
Regulators from the Federal Reserve and the Office of the Comptroller of the Currency (OCC) released a chart detailing how payments from the bank foreclosure abuse settlement would be calculated. According to the chart, payments range from $300 to $125,000 – the maximum amount allowed under the settlement terms.
Homeowners who have already received their checks are alleging they are much smaller than promised under the terms of the deal. Some report they were shortchanged by hundreds of dollars based on the chart, with no explanation of how their payout was calculated. Other homeowners say they were paid only a fraction of what they feel they are owed from the improper foreclosure methods.
Part of the problem lies in the fact that the bank foreclosure settlement is a blanket deal aimed at resolving claims involving millions borrowers. Regulators crafted the deal to pay out all 4.4 million people who received foreclosure notices in 2009 and 2010, regardless of whether they suffered any harm. Eleven categories were created to offer more money to borrowers who suffered the most harm, with a minimum $31,250 payout going to those who suffered a “complete foreclosure.” Those who suffered the least harm will receive $300.
The settlement replaces a long and costly program called the Independent Foreclosure Review, which utilized independent third parties to review troubled loans on a case-by-case basis. The program was nixed after a year, however, due in part to how difficult it was to review millions of loan files and determine which state and federal violations applied.
Under the settlement, the banks themselves will be making these evaluations, which begs the question: if thousands of outside consultants could not do the job in a year, how can the banks be expected to do the same thing in a matter of months?
Unfortunately, there is little recourse for homeowners who feel they were shortchanged by the bank foreclosure abuse settlement. Luckily, the terms of the deal do not prevent these borrowers from pursuing future legal action related to their foreclosure.
Updated May 9th, 2013
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11 thoughts onHomeowners Say Foreclosure Settlement Checks are Smaller than Promised
We are looking for a really good law firm to file lawsuit against these banks for what they have done.
We didn’t even get a check, we filed and we paid so much in interest, where’s ours? We lost our house in 2008, somebody please help!
We were cheated too… we received 500 dollars… after three years of ruining our lives with a “modification” scheme… having me mail fax and remail refax ALL our documents MANY times, we were told we were ineligible. we lost everything! Had no money to move as we had become disabled, Citimortgage would NOT work with us and wait 3 more months until my husbands disability came through (when we could have caught up on our mortgage. No instead they sold our house for pennies on the dollar, and gave us 500…. crooks… government must be crooks too… or else why would they let Rust Consulting send us 500, when they said the least we would get was 800, and possibly more? I give up on all of them. I will NEVER use a BANK again or trust what I am told by our gov’t.
Waited a year to my suprise receive a $600.00 check in exchange for losing my home, my down payment and many years of payment on my house. Is that fair???? I lost my beautiful home in a beautiful city and now renting. Not even enough money for one months rent or to move to another location! CROOKS!
Yes we got a $300 check, and was granted a modification. We only owed about $17,800 on our home, and after the modification the balance went up to about $30,000 and they only gave us five years to pay that. Not only was we missed with the charges we also payed another down payment in order to keep our home. I feel that $300 was a slap in the face.
I lost my home and am struggling today, 83 years old in 2013 and was sent $300 check. The maximum amount, not just a little bit bigger of a check. We suffered a loss not so grand but not so minute. At lease do the right thing. Looking for a check a lot bigger.
We lost our home after living in it since 1994. Was sent a $600 check. WOW, deserve so much more since Bank of America foreclosed our loan with modification.
Was one of the people you are talking about, we didn’t get the correct amount and was cheated.
Chase broke multiple laws to include violations to the Servicemebers Civil Relief Act (SCRA). As my husband still serves our country with 16+ years in….the $600 check was slap in the face.
Yes we were one of those that was not paid the correct amount, we were denied modification, we were active duty. and we were told we lost our house in 09.. we received 600.