Payments to more than 220,000 borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley are scheduled to begin on Friday, May 3 following an agreement announced earlier this year by the Federal Reserve Board.
Under the agreement, $247 million will be made in direct payments to borrowers whose homes were at any stage of the foreclosure process in 2009 and 2010 with the former subsidiaries of Goldman Sachs (Litton Loan Servicing LP) and Morgan Stanley (Saxon Mortgage Services, Inc.).
Payments will range from $300 to more than $125,000. In most cases, borrowers will receive a letter with an enclosed check sent by the paying agent--Rust Consulting, Inc. Some borrowers may receive letters from Rust requesting additional information needed to process their payments. Previously, Rust sent postcards to borrowers notifying them of their eligibility to receive payment under the agreement.
The payments stem from agreements reached earlier this year between 13 servicers and two agencies—the Office of the Comptroller of the Currency and the Federal Reserve. The agreements provide for a total of $3.6 billion in cash payments to 4.2 million borrowers. Distribution of checks to borrowers whose mortgages were serviced by the other 11 servicers began April 12 and will continue through mid-July. As of April 26, approximately 1.2 million checks have been cashed or deposited totaling approximately $1.2 billion dollars.
As in the case of the other servicers, payment amounts for borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley were determined after categorizing borrowers according to the stage of the foreclosure process and the type of possible servicer error. In some cases, the payment amounts for Goldman Sachs and Morgan Stanley borrowers differ from those received by borrowers in the same categories with the other 11 servicers. The amounts differ because borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley were not able to request a review of their foreclosure file.
As is the case for borrowers whose mortgages were serviced by the other 11 firms, borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley who accept a payment will not be prevented from taking any action related to their foreclosure. Servicers are not permitted to ask borrowers, in connection with accepting these payments, to sign a waiver of any legal claims they may have against their servicer.
Borrowers with all 13 servicers can call Rust at 1-888-952-9105 to update their contact information, verify that they are covered by the agreement, or with further questions. Information provided to Rust will only be used for purposes related to the agreement. Borrowers should beware of scams and anyone asking them to call a different phone number or to pay a fee to receive payment under the agreement.
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