Ten major mortgage companies, including JPMorgan Chase, Bank of America and Wells Fargo, have agreed to pay $8.5 billion to settle federal complaints involving wrongful foreclosure actions against homeowners in 2009 and 2010.
The settlement could put anywhere from a couple hundred dollars to $125,000 in the pockets of nearly 788,000 California borrowers -- some 140,865 of the Inland region -- whose homes were in foreclosure in 2009 and 2010.
The sum includes $3.3 billion in direct payments and $5.2 billion in other assistance, such as loan modifications or and forgiveness of deficiency judgments.
Besides Bank of America, Chase and Wells Fargo, other major lenders and loan servicers agreeing to the settlement affecting some 3.8 million people across the U.S. include: Aurora, Citigroup, MetLife Bank, PNC Financial Services, Sovereign, SunTrust and U.S. Bank.
Announced jointly by the Federal Reserve and Office of the Comptroller of the Currency, the new agreement stops the Independent Foreclosure Review process that was set up in a 2011 enforcement action.
Borrowers had been given until Dec. 31 to apply for the case-by-case review.
But the number of applicants was so low federal agencies and major banks were criticized of keeping the loan-by-loan review process under wraps, and of paying large sums of money to consultants to determine compensation.
Before the deadline, only 495,000 people across the U.S. applied.
As of Sept. 27, the Federal Reserve noted only 42,402 requests had been filed by California-based borrowers for an Independent Foreclosure Review -- a mere 8,000 hailed from the Inland region.
Days before the Dec. 31 deadline, consumers reacted angrily to repeated shut-downs of the Independent Foreclosure Review website. A telephone bank issued an automated recording that said no one could answer the phone due to the high volume of calls.
Borrower Robert Puscinzna, in an e-mail, wrote: "There are many people like me who are not able to file a complaint because the company in charge was not prepared to handle the volume. They should be held responsible."
Brian Hubbard, a spokesman for the OCC, said the new settlement puts a broader framework in place, and speeds up the turn-around time for all eligible borrowers to get their compensation -- whether they filed for an Independent Foreclosure Review, or not.
Eligible borrowers will be contacted by the end of March with payment details, he said.
Bessie Johnson, a Riverside homeowner who averted a bank-taking of her home last summer and is now in the final phase of a loan modification after a full-scale protest was waged at a local bank, said it's great this is all coming to a head.
"Banks got away with this for so long, I couldn't help but feel they were trying to get off'' with the bare minimum, said Johnson, who applied for the independent review months ago, and has already sent in details she says documents robo-signed foreclosure action in the hope of recovering some of the $130,000 she lost in loan forgiveness.
"I think the banks thought it was all water under the bridge,'' she said. "I'm glad it's not."
Comptroller of the Currrency Thomas Curry said the new agreement represents a "significant change in direction" to meet the original objective to ensure consumers were compensated from harm done to them in a quick, direct manner.
"It has become clear that carrying the case-by-case process to fruition would divert money from impacted homeowners and needlessly delay the dispensation of compensation to affected borrowers," Curry said.
"The new course of action will speed recovery in the nation's housing markets."
Michael Natzic, community banking specialist with Stone & Youngberg, said he thinks the new settlement will put to bed a long, drawn-out process which all 10 banks wanted to rectify.
"The question is, in my mind, how we will see it trickle down to homeowners and consumers," he said.
Norma Garcia, a senior attorney for the Consumers Union's financial services program, reserved an opinion over whether or not this will be good for consumers until she sees terms of the settlement.
She said some criticism was expressed by ranking Rep. Darrell Issa, R-Vista, and Elijah Cummings, D-Md., the top Republican and Democrat on the House oversight and government reform committee, on Friday before the deal was announced.
Their letter sought a briefing to provide Congress with answers to "serious" questions over how the amount was determined.
Puscizna said in a phone interview Monday that it's good the settlement is attempting to cover everyone. "The response was so low," he said, he couldn't help but feel the initial process would have offered remedies to only a few.
As it stands, four banks still are under the original Independent Foreclosure Review terms, among them: Everbank, OneWest Bank, HSBC and Ally.
Four Banking industry stocks were trading down on Monday, but Natzic said he thinks the settlement will not have a significant impact on trading activity going forward.
"I think this was largely built into the market," Natzic said. "We look at the turn-around in all of these institutions since 2008 and 2009, and they are getting back on track from an earnings standpoint. I don't think this will throw them off dramatically."
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