Starting Friday payments will begin going out to more than 18 thousand Georgians. It’s part of a settlement with 13 mortgage servicers who admitted taking shortcuts in the foreclosure process. Critics say the settlement isn’t enough.
The agreement between the lenders and the federal Office of the Comptroller of the Currency and the Federal Reserve will provide payments to 4.2 million borrowers nationwide who were in the foreclosure process in 2009 and 2010.
OCC spokesman Bryan Hubbard says payments will range from 300 to 125 thousand dollars.
He says “In those categories where the potential harm was greater, you will see sizeable checks. But in the vast majority of the 4.2 million, the checks will be less than a thousand dollars.”
The institutions will pay out a total of 3-point-6 billion dollars to homeowners nationwide. Hubbard says homeowners have already been notified.
“Eligible borrowers mean anyone who was in foreclosure process, at any state of the process, in 2009 or 2010. And were serviced by these participating companies.”he says.
Georgia Congressman David Scott, who sits on the House Financial Services Committee, says this should be a wake up call going forward.
“We’ve got to look at this and know that folks getting 300 dollar checks. I mean that may get you a tank of gas now, but it’s certainly not going to help you with your home.” he says.
Scott says the mortgage servicers often didn’t even confirm whether homeowners should have been in foreclosure.
He says“I’m disappointed quite frankly in how this was done. I don’t think the average homeowner down there was looked out for as they should. The average homeowner, they’re getting a check of 300 dollars. That ain’t right.”
Darren Blomquist , vice president of Realtytrac, says the settlement just throws cash at the problem, setting a bad precedent.
He says“It lets the lenders off the hook in terms of not really holding them accountable for the bad foreclosures. And then on the other side, I think it’s rewarding bad behavior. You’re lumping people together who were wrongly foreclosed on as well as people who were correctly foreclosed on. Those homeowners may think the next time they get into trouble they can just stop making their mortgage payments and down the road they’ll actually be compensated for not honoring that commitment.”
The settlement does not address whether homeowners were harmed by the foreclosure shortcuts. Anyone who accepts the payment is still eligible to sue their mortgage service provider.