The impact of the mortgage meltdown continues to make its way through the economy, even after almost seven years since the start of the crisis. To date, homeowners across the United States have received around $3.1 billion in cash under the federal settlement with 13 large banks in 2013 over alleged misconduct in processing loans that may have resulted in wrongful foreclosures, according to a new report released this week by the Federal Reserve.
The report stated that 83% of the 4.2 million borrowers covered under the settlement, or nearly 3.1 million, have cashed checks as of April 25 ranging from several hundred dollars up to $125,000.
The 13 banks involved in the settlement include Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, Goldman Sachs, MetLife Bank, HSBC, Morgan Stanley, PNC Financial Services, SunTrust, Sovereign and U.S. Bank.
The original $9.3 billion settlement required $3.6 billion in cash payments to homeowners and $5.7 billion in aide, including mortgage reductions. The settlement ended a review of files required under action by the Federal Reserve and the Office of the Comptroller of the Currency.
The report did not specify the total amount of aid homeowners have received so far.
The report also stated that homeowners received money faster than they would have it the process called Independent Foreclosure Review had been used instead.
The $8.5 billion settlement was reached in January 2013 with major banks over alleged foreclosure abuse. Alleged abuses included “robo-signing,” when banks automatically sign off on foreclosures without reviewing the documentation.
Borrowers eligible for cash compensation under the settlement are those whose homes were in foreclosure in 2009 and 2010. Homeowners who were wrongfully denied loan modifications are eligible to smaller payments, while consumers whose homes were unfairly taken and sold are eligible for the largest payments.
When it was announced, the settlement grew a great deal of criticism from advocacy groups, who said the compensation offered to victims of foreclosure abuse was minuscule in comparison to the scale of the abuse from major banks and servicers.