Foreclosure Settlement Deal Details Trickle Out
When the $9 billion foreclosure settlement deal was announced earlier this month, along with the elimination of the oft-criticized independent foreclosure reviews, the banks and federal regulators involved weren’t particularly forthcoming with details.
Our Miami foreclosure lawyers however are beginning to learn more about how it will work.
Politico is quoting insiders to report that banks have been given one month by the Office of the Comptroller of the Currency and the Federal Reserve to affix borrowers into one of 11 categories that will define how much compensation each person or family will receive. After that, each bank has to issue a check to those individuals within 45 days of making that determination.
Federal regulators have publicly said they are looking for a final resolution to all of this by March, but they still won’t offer any further specifics.
(The deal had previously been set at $8.5 billion, but was raised to $9 billion when Morgan Stanely and Goldman Sachs hopped aboard too.)
Banks have crowed about how they pushed for a resolution on all of this in order speed up compensation to customers wronged by their abusive and fraudulent practices. But as it turns out, it may have been driven far more by their own bottom line. First of all, as we previously reported in our Miami foreclosure lawyer blog, the expedited deal allows these firms to tack the losses onto last year’s earnings, which means they can come up smelling like roses in the current fiscal year. And secondly, the deal put an end to the independent foreclosure reviews, which were reportedly costing banks hundreds of millions of dollars each quarter and would likely have stretched through the next two years. In fact, review costs for this year were expected to be even higher than last year. Now, they can stop the hemorrhage of that cash flow immediately.
As one official with JP Morgan Chase put it: The savings for the firm as a result of this deal will be “significant.” No doubt the motivations for the other banks were along those same lines.
The settlement is intended to not only compensate those who suffered wrongful foreclosures at the height of the robo-signing crisis, but also to allow for foreclosure prevention assistance to borrowers who are still on the brink.
The reviews were initially required by federal regulators, but they were scrapped after serious questions were raised about the validity and fairness of the reviewers’ results, as there was no uniformity to the program and it was mostly being overseen directly by bank managers, as opposed to the government.
According to reports, no borrowers had received any compensation yet from the review program, though some were set to receive it by December. Those individuals will now likely have to wait until at least March.
The banks are now going to have to tear through millions of loan files to categorize borrowers. What’s especially troubling to us is that it’s the banks that have been left in charge of it all. Once again, they are given the opportunity to decide how much they will pay for their own failures and misdeeds.
Some lawmakers are already raising this point. One Democratic Senator from Ohio sent a formal letter to both top regulators recently, expressing concern that the methods we have learned of so far may lead to many borrowers getting back far less than they should.
The regulators have yet to respond.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.