CHECKS TO BE SENT IN $3.6B HOME LOAN DEAL

Payments are part of foreclosure settlement

Checks for millions of mortgage borrowers are almost in the mail as a result of a federal settlement about foreclosure abuses, but they won’t be very big in most cases.

Payments to 4.2 million mortgage borrowers are scheduled to begin Friday under an agreement between banking regulators and 13 companies that service home loans.

The agreement emerged from the government’s investigation of the socalled robo-signing scandal, in which mortgage servicers sometimes pursued foreclosures without properly prepared documents.

The settlement provides $3.6 billion in cash payments to borrowers whose primary homes were in any stage of foreclosure in 2009 or 2010 and whose mortgages were serviced by one of the companies.

The payments will range from $300 to $125,000, depending on how much harm a borrower potentially suffered as a result of actions by the mortgage servicer.

The largest number of borrowers will get $300, according to data released Tuesday by the Office of the Comptroller of the Currency.

Those borrowers include more than 900,000 who had a loan modification request approved but still ended up in foreclosure.

Regulators set up 12 levels of potential harm. Servicers slotted borrowers into the ones most applicable. Those decisions were checked by regulators, OCC spokesman Bryan Hubbard says.

The borrowers who’ll get $125,000 payments include 1,082 borrowers who lost homes to foreclosure even though they were protected because of their military service, and 53 borrowers who lost homes to foreclosure even though they weren’t in default on the loan, the OCC says.

Those borrowers may also get payments to cover lost equity.

Almost 1,000 people lost homes to foreclosure even though they successfully completed a trial loan-modification plan, the data show. They’ll get $25,000 to $50,000.

Another 763 will receive $62,500 because of completed foreclosures, even though they were protected by bankruptcy laws. Those borrowers had earlier requested a review of their cases.

A far larger group, 5,075, also lost homes to foreclosure while protected by bankruptcy laws. They’ll get $31,250.

Overall, “most people will get a fraction of the amount they should get,” says Alys Cohen, of the National Consumer Law Center.

The companies covered by the settlement are Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo.