(Bloomberg News) U.S. banks including JPMorgan Chase & Co. and Citigroup Inc. will pay as much as $125,000 plus equity to individual customers most harmed by mishandled foreclosures in 2009 and 2010, according to a remediation plan released by bank regulators.
"While we've made great strides since we took enforcement action against large mortgage servicers last year, much work is still ahead," said Thomas Curry, U.S. comptroller of the currency, in a statement. This industry guidance "helps people who are considering requesting a free review to understand how they may be compensated for the financial injury they may have suffered," he said.
A group of the largest mortgage servicers were ordered by the Office of the Comptroller of the Currency and other banking regulators last year to clean up their foreclosure practices and hire independent consultants to see whether their foreclosure methods in 2009 and 2010 unfairly hurt specific customers. The 14 firms, also including Wells Fargo & Co., could be instructed to give lump-sum payments between $500 and $125,000 in each case involving improper practices, the regulators said.
Besides lump-sum payments, loan servicers who improperly handled foreclosures may have to rescind them, modify loans or correct credit reports, according to industry guidance issued today by the OCC and the Federal Reserve.
As of the end of May, 193,630 people requested their cases be reviewed, and 144,817 files were chosen for study by consultants, according to a six-month report on the process also released by the regulators today.
Borrowers who lost homes to foreclosure in 2009 and 2010 were also given a deadline extension from July 31 to Sept. 30 for filing to have foreclosures reviewed for potential errors and misrepresentations, and can do so through www.independentforeclosurereview.com.