Mortgage Settlement - Are You Due a Refund?
More than 432,000 Californians who lost their homes to foreclosure may get money through a historic mortgage settlement between 49 states and major banks, the state Attorney General's Office said Tuesday.
Eligible borrowers may receive at least $840, but the exact amount depends on how many people submit claims, said Nick Pacilio, a spokesman for the AG's office. The higher the number, the smaller the claim amount will be.
Consumers who receive letters were chosen because their homes were foreclosed upon between Jan. 1, 2008, and Dec. 31, 2011, and because they had home loans serviced by the banks named in the $25 billion mortgage settlement. They are Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo.
The deal, approved in court five months ago, required those lenders to provide relief to homeowners in the form of principal reductions, loan refinances, restitution and short sales. The relief was the answer to allegations that mortgage servicers reviewed and approved loan documents without proper review, abuse also known as robo-signing.
Borrowers should expect to receive packets by mail starting this week and through Oct. 12. Packets include a claim form that should be filled out and details about the settlement.
The Attorney General's Office has urged borrowers to fill out the claim form and return it by Jan. 18, either by mail or at nationalmortgagesettlement.com.
Pacilio, the AG's office spokesman, warned of possible scams related to this process. The paperwork being sent out does not ask for financial information, such as bank account or Social Security numbers.
Instead, consumers should see a simple form with checkboxes next to three common scenarios -- unable to pay mortgage because of financial hardship, loan modification was mishandled, and the mortgage servicer made errors during the foreclosure process.
Borrowers should check the box next to the situation that applies. Reparations will not vary by situation, Pacilio said.
The agency that was set up to oversee the mortgage settlement will review the claims. Payments are expected to be sent out by mail in the middle of 2013.
This review is different from another review process that provides free independent audits for borrowers who were in the foreclosure process in 2009 or 2010. Homeowners in this process may also receive compensation or other remedies if reviewers find any financial harm caused by one of the 14 participating lenders.