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US regulators agree to $9.3bn foreclosure relief with 13 banks

The US federal regulators have finalized a $9.3bn relief agreement with 13 banks to settle foreclosure abuses claims and offer compensation to homeowners over flawed mortgage loan servicing and processing.

Settlement was signed by the US Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board with Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, US Bank, and Wells Fargo.

Based on the terms of the agreement, the banks have agreed to reimburse $3.6bn in cash and $5.7bn in other assistance to nearly 4.2 million homeowners, who were in foreclosure during 2009 or 2010.

It is most likely that Paying Agent Rust Consulting will contact the mortgage borrowers, by the end of March 2013 with payment details.

It is believed that the borrowers will receive compensation in the range of hundreds of dollars to $125,000, without taking any additional steps.

The servicer lenders are expected to undertake well-structured loss mitigation efforts focused on foreclosure prevention, in providing the $5.7bn in assistance.

Both regulators OCC and Federal Reserve will remain monitoring the servicers’ implementation of corrective actions required by the original enforcement actions to address unsafe and unsound mortgage servicing and foreclosure practices.

It is likely that the reviews for these servicers will complete over the course of the next year.