More than 3,000 borrowers in Queens who were in foreclosure in 2009 and 2010 may receive anywhere from a few hundred dollars to $125,000 after federal regulators cut short an investigation before fully determining the scope of possible abuses by 10 mortgage servicers.
The comptroller of the currency, who investigates institutions affiliated with the U.S. Treasury, announced last week his office had reached an $8.5 billion agreement following an investigation into the foreclosure processing practices of Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo.
Financial regulators ordered the reviews amid accusations the banks were robo-signing foreclosures without adequately verifying the paperwork.
The probe, however, was cut short due to cost overruns, and instead of compensating borrowers on a case-by-case basis the office will use what it called a “broader framework” to deliver relief more quickly.
“We have learned a great deal from the reviews that have been conducted to date. However, it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers,” Comptroller of the Currency Thomas Curry said in a statement Jan. 7. “Our new course of action will get more money to more people more quickly, and it will speed recovery in the nation’s housing markets.”
“When we began the Independent Foreclosure Review, the OCC pledged to fix what was broken, identify who was harmed, and compensate them for that injury. While today’s announcement represents a significant change in direction, it meets those original objectives by ensuring that consumers are the ones who will benefit, and that they will benefit more quickly and in a more direct manner,” he added.
The New York Times reported last week that the investigation was farmed out to contractors hired by the banks, and a critical flaw was that employees were encouraged to minimize the number of flawed foreclosures.
The comptroller’s office announced $3.3 billion will be made in the form of direct payments to eligible borrowers through a payment agent and $5.2 billion will be set aside for other assistance such as loan modifications and deficiency-judgment forgiveness for borrowers who were in foreclosure in 2009 and 2010.
According to the real estate website propertyshark.com, 2,258 residential properties in Queens were foreclosed on in 2009 and another 1,413 properties in 2010.
The years 2009 and 2010 were some of the worst for Queens homeowners. In 2008, foreclosures hit their peak at 2,359, almost four times as the next borough, Staten Island. As new regulations came into effect, foreclosure underwent a steep decline to just under 400 in 2011, but the number of delinquent mortgages continued to rise.
According to propertyshark.com, 2012 represented a seven-year low for the borough, with just 358 foreclosures, down 85 percent from the peak in 2008.
In October, the U.S. Department of Housing and Urban Development put a 90-day moratorium on foreclosures of Federal Housing Administration-insured mortgages for homes affected by Superstorm Sandy.
Reach reporter Rich Bockmann by e-mail at firstname.lastname@example.org or by phone at 718-260-4574.
©2013 Community News Group
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