If your home was in foreclosure (whether you lost it or not) during 2009 and 2010 listen up, and watch your mailbox the next few weeks. During this period there were exactly 1,075 foreclosures filed in Eagle County and probably a few hundred more that were filed in 2008 that were pending during 2009-10.
Since 2011, the federal government has been trying to work out a settlement to address abuses in foreclosure practices by several major banks and mortgage servicing companies. The result of this initially was the Independent Foreclosure Review project, which entailed borrowers whose loans were being serviced by any of 13 major servicers that were foreclosed upon during 2009-10 to apply to have their paperwork reviewed, and in theory, if deficiencies in the foreclosure process were detected, those borrowers would be eligible for some form of cash payment or other help from the lender.
Of the approximately 4.3 million borrowers who might have been eligible only about 11 percent of them applied. And for those who did apply the process and the system simply could not handle it. After nearly a year, only about 80,000 of the 400,000 files had been thoroughly reviewed and it looked as if the process could drag on for a decade and still only reach a small fraction of impacted homeowners.
So the feds decided to wrap up this dark chapter in our nation's history in a time-honored way that only governments think will work. They decided to just put together a big pot of money (though in this case it's not as big as it sounds) and just start handing out checks! One wonders if this is not part of the plan to bail out the post office by mailing millions of letters all at once.
So in January of this year the Office of the Comptroller of the Currency and the Federal Reserve Bank (who had been overseeing the failed Independent Foreclosure Review) announced an agreement with 13 banks and servicers to pool $3.6 billion in cash and split it up amongst 4.3 million borrowers and send out checks to everyone.
In addition, the lenders agreed to provide billions in relief to homeowners who are still struggling but in their homes via loan modifications.
Now before you go shopping for a good bottle of bubbly to keep chilling for the day the postman brings you a big fat check, you might want to wait and decide if you will be getting Cristal or Cold Duck (do they still make that stuff?).
For starters, if your foreclosed loan was not serviced by Aurora Bank, Bank of America, Citi, HSBC, Chase, MetLife, PNC, Sovereign Bank, U.S. Bank or Wells Fargo, you won't be getting anything.
If you currently have a loan with one of these lenders, you may be eligible for some relief if you can show a hardship to keep you in your home in the near future.
But if your foreclosed loan was serviced by one of these lenders, then you will get something, but it probably will not be much.
Before you start hankering for a glass of Cristal, note that if the money were divided even Stephen between all 4.3 million borrowers, each would get $837.21. Not much if you lost your home due to illegally robo-signed documents.
So a formula has been determined to spread out the money depending on how badly you were injured, or at least according to your lender. The top payout will be $125,000, presumably for those who lost their homes via fraudulent practices by the lender and the lowest may be a few hundred dollars. Certainly the vast majority will probably be under $500. But everybody is supposed to get something.
The feds say this will be done by strict criteria, putting borrowers in one of four categories but they have not yet announced how much each category will pay or what the requirements are to fit into a given category.
The first mailings are supposed to start flowing by the end of March, and it is my understanding that initially postcards will be sent out advising borrowers of their eligibility. That will be followed by letters that will either ask for more info or containing a check.
I would guess the formulas will not be announced until the checks start being cut because by then it will be too late for Congress to howl in protest and consumer advocates to rush to court to try and do it their way.
But, one big question is how will they locate these 4.3 million people. Given that once you lose your house you probably tend to move around a bit the next few years, there is little chance that anyone has an accurate address list except for those who applied for the foreclosure review. No strategy has been announced yet to locate these millions of folks.
But if you are one of those impacted the OCC and the Fed ask you to call 888-952-9105, which is the number for a company called Rust Consulting, who is the firm that will be handling the disbursements. Here's a tip - when you call you will get a recording saying the submission window is closed, but don't give up. Work through the voice prompt system and you can get to a person and give them your information. They will need the loan number which many people will not have readily available, but that would be on your old loan documents, or possibly on your credit report. Or call your old lender and ask them to look it up under your Social Security number.
Chris Neuswanger is a mortgage loan originator with Macro Financial Group in Avon and may be reached at 970-748-0342. He welcomes mortgage related inquiries from readers.